Blockchain Technology in Real Estate Sector
“Integrating Blockchain Technology in Real Estate sector is going to make it more secure, transparent, accountable and easily managed”
Key Takeaways:
· Technology Trend in Real Estate
· Blockchain Benefits for Real Estate Industry
· What is Blockchain Tokenisation?
· What is Blockchain Tokenisation in Real Estate?
· Blockchain Use Cases in Real Estate Sector
Digitisation of an industry is not something like downloading an application; the digital transformation is possible only when we have reliable platforms to operate through them. During the pandemic huge number of cases of data breaches, financial frauds, identity theft floated in the news, which reconfirmed the vulnerabilities in existing cyber world.
In the past few years the use of Blockchain across industry has gained considerable significance, it is already being hailed as one of the important technology of the 21st Century.
Accenture defines Blockchain as “a new way of storing data in a distributed ledger that allows multiple stakeholders to confidently and securely share access to the same information.” In essence, Blockchain is a distributed data system that anyone can join or leave at will. Sounds as nothing revolutionary? But it really is.
The decentralization, transparency, immutability is promises is the prime reason why Blockchain is often referred to as the “technology of trust.”
Global Technology Trend in Real Estate
Real Estate is one of those sectors that have seen minimal technological intervention; in fact the valuation this industry commands, the case should be otherwise. There is an urgent need to adopt technology that can monitor, manage and mitigate the persistent risks of the real estate sector. The covid pandemic has posed new challenges to the real estate industry.
Real Estate is no more a “local phenomenon;” through it flows huge amount of data and dollars, according to MSCI report the size of the professionally managed global real estate investment market increased from $8.9 trillion in 2018 to $9.6 trillion in 2019. That kind of huge monetary transactions need to be monitored to keep public money safe and accounted.
Blockchain Benefits for Real Estate Industry
Blockchain technology can put forward the much needed security in the real estate industry. Real Estate Tokenisation is one of the ways that has become a reference point.
What is Blockchain Tokenisation?
Deloitte explains, the tokenization of assets refers to the process of issuing blockchain token (a security token) that digitally represents a real tradeable asset – in many ways similar to the traditional process of securitization, with a modern twist.
What is Blockchain Tokenisation in Real Estate?
Tokenization is the process of digitizing an asset. Property tokenization or real estate tokenization is the conversion of property value into digital tokens that are sold to the investors for fundraising. Tokenizing allows one to split the asset (property) into tokens or shares, through blockchain-based real estate tokenization platforms. These tokens represent a specific number of shares of a real estate.
“Blockchain disruption has guided industries to efficient and effective solutions; real estate sector is soon to be revolutionized,” Blockcube.
The Etherium platform is providing the following blockchain benefits for the real estate sector.
Process efficiency for underlying industry operations
Reduced costs from process automation
Access to global asset distribution
Access to broader investor pools due to ownership fractionalization
Access to secondary market opportunities
Data accessibility to increase transparency and inform better investment decisions and portfolio management
Blockchain uses smart contracts that act as the “code laws” for the implementation of the agreed terms and conditions. Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss.
Blockchain Use Cases in Real Estate Sector
Asset Management and Real Estate Funds:- Tokenisation can help in managing ownership rights, maintaining transaction history, knowing the status of assets insurance, transfer of property. Moreover it can help in improving liquidity of the assets.
Project Financing:- Transparency, tracking and security in transactions will invite more investors. Better investor experience and RoI will boost the confidence of confidence.
Loan and Mortgage Securitization:- Secure Data Sharing, Immutable Transactions, Real-time monitoring of settlement will improve the scenario around loan and mortgages. Blockchain can hugely cut-off financial frauds in real estate sector.
Property Management:- BCT eases data sharing, rent collection, payments, record maintenance, valuation of property, and significantly maintaining due diligence. It reduces cost, time and will efficiency of the system.
Land and Property Registries, Sales, and Reassignment:- Paper documents are vulnerable to fraud, damage, loss and mismanagement. The entire process is asks for costly legal arrangement.
Blockchain with its’ immutable ledger provides single source of truth to maintain land registry documents in a hassle-free manner.Urban Planning:- A holistic and reliable land record can assist in better urban planning. The smart cities need blockchain-based solutions to develop sustainable cities.
Property Development and Construction:- Blockchain in real estate can improve the system by providing accountable and traceable procurement, streamline project management, and updating project status. Using smart contracts for making payments and agreements will be another feature.
Investor and Tenant Identity:- Blockchain-based solutions will ensure that investors and tenants coming on board have been duly verified. Background and identity checks will reduce the risk of financial frauds. Running KYC/AML checks through blockchain will enhance the financial security of projects.
Payments and Leasing:- Distribute Ledger will eliminate the need for manual reconciliation, therefore, streamline every processes right from construction payments to receiving of payment from tenants or sales.
Blockchain technology will redesign the way real estate industry functions; the idea of smart and sustainable cities that are being idealised needs a blockchain finishing.
Blockcube is one of the leading research houses in Blockchain that provides specialized consulting and development in a wide range of industries. Blockcube Technology is a technology partner of Software Technology Park of India, other government organisations and corporates.
Author Bio: Animesh Chandra is an enthusiast writer. He is a trained journalist from IIMC, New Delhi. He has earlier contributed to National Media Houses, Public Relations, Independent Film Makers, EdTech industry and is now exploring deep into technologies that are making human lives easier. He is interested in observational writing, photography & traveling.
Disclaimer: The ideas presented here are personal views of the author and do not convey the viewpoint of any specific organisation.
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