Blockchain in Real Estate: Blessing to Some, Threat to Others, Revolution for the Industry
On the back of New World Development’s decision to accept online deposits for its project in North Point, it’s worth exploring the progress and impact of Blockchain on the real estate industry.
Blockchain has moved from a buzzword in technology and investment circles to the top of the mainstream lexicon following the meteoric rise and subsequent plunge of cryptocurrencies in 2017-2018. Simply put, Blockchain is a digital ledger of publicly recorded cryptocurrency transactions, broadly portrayed and celebrated as decentralised, scalable, encrypted, and unhackable. The hype is incredible. Some tout the technology as the “future of finance”, “a banking industry revolution”, and many equally expansive labels. Meanwhile, others remain cautious with a finger on the regulatory pulse.
How is Real Estate Affected?
Boasting unprecedented transaction speed and efficiency, accessibility and cost savings, the Blockchain revolution promises major fundamental change to the real estate industry in decades to come.
Though widespread acceptance of cryptocurrency payments hinges upon adoption by large corporations in the industry, a growing number of companies are creating their own crypto-driven models. Further, new players are utilising Blockchain for an ever-expanding list of applications, including smart contracts, fast-tracked and secure payments and processes, investment, and building management.
Who are the Key Players?
Two notable examples are SMARTRealty and Propy.
SMARTRealty has been widely reported on and applauded in 2018. The company offers comprehensive blockchain solution spanning smart contracts, listings, and official tokens for use with their products. The beauty of SMARTRealty is that it’s systems fit over legacy systems, rather than pushing for full-on industry disruption. Early adopters are lining up, with upwards of 500 companies having expressed interest.
Propy is self-defined as the first global multi-language real estate marketplace. It makes cross-border property purchases as easy as booking a hotel by streamlining the buying process with secure Blockchain-powered payment and documentation. Several other companies with large-scale backing are lining up to offer similar services on a global scale.
Push for Public Trials Spread across the Globe
In Sweden, government trials of Blockchain technology for property transactions are complete, with promising feedback in the aspects of time saving, security, and contract verification. Similar trials are scheduled in Japan, UAE, Georgia, and UK, among others, as rising interest globally lures more and more spectators to dip their toes in the Blockchain pool.
Liquidity and Access for All?
Blockchain’s ability to remove friction from the sales process has garnered widespread attention. However, its even greater potential for influencing market and pricing lies in the so-called “unitisation”, which facilitates hassle-free trading of real estate “units” online. With regulations still evolving, such a phenomenon would potentially close the liquidity gap between real estate and assets with higher tradability, just like in stocks, bonds and derivatives.
London’s own Estatechain, a real estate trading platform powered by the Ethereum cryptocurrency, is a global marketplace for this very concept. It allows owners to sell units of their properties, effectively dodging the often-onerous process of finding a buyer. With unlimited liquidity and fractional buy-ins, unitisation theoretically stands to throw open the doors of major property markets to the previously priced-out masses. Nonetheless, some question the necessity of a highly liquid property market and its long-term impacts on value, risk, and the inherent appeal of real estate as an asset class.
After the Hype, Wait and See…
With a growing number of companies, in a variety of capacities, focused on Blockchain for real estate, the technology will undoubtedly have a major impact down the line. From simple streamlining of processes to potentially redefining an asset class, the possibilities are endless. For now, however, we should look through the overwhelming hype over the application benefits and regulatory efficiency of Blockchain, and take time to experience and assess the full brunt of this revolutionary technology on our industry.