Real estate is one of the largest asset classes in the world. And in 2021, commercial enterprises and real estate professionals have started to realize the transformative impact that blockchain technology can have in their industry. This impact will be in terms of optimizing retail and commercial property sales, streamlining payments, better investment opportunities, and increasing access to real estate funds.Blockchain has been successful in transforming the commercial real estate market in some places into a more innovative and advanced market. In this article, we’ll dive deeper into some of the most prominent blockchain uses-cases for the real estate industry in 2021. But before we do that, let’s take a look at some of the most common problems that blockchain can solve in real estate.What Significant Problems Can Blockchain Application Solve in Real Estate?In the last few years, the commercial real estate industry has seen a drop. This drop has mainly been attributed to some problems that continue to stay as objections in the current development of the market.A good solution to those problems is blockchain development. So, let’s look at these real estate industry problems and how the application of blockchain can solve those problems.
Lack of Transparency and Slow Operations
One of the biggest factors that prevent industry growth is the total lack of transparency between the contractors. This further causes corruption, fraud, and money laundering. This is where blockchain can come in the real estate industry in the form of secure databases.A secure database will make sure that information related to leasing, purchasing, and sale transaction records become common knowledge. This will ensure that the realtors don’t end up stepping on each other’s toes. There are several listing services that collate property-level information from the private databases of brokers and agents. This is a prime example of why this technology is so critical.
Unsecure Titles and Data Management
Another issue in the real estate industry is improper record-keeping. This is a critical process for having a fast business process. With the help of blockchain, all entities will get digital identities that cannot be mistaken or appropriated.This will lead to more transparent recordkeeping with things like liens, property titles, and financing. This technology will allow making titles companies disintermediated through blockchain.
Slow and Unsafe Transactions
Most real estate transactions come with conditional clauses, need a long time to process, and have to be transferred safely. These features can be served with blockchain and all of this can be executed efficiently.With the help of blockchain, real estate entities can also check if transactions have been enacted and if their conditions have been met. Blockchain will also provide a higher security standard of data encryption to the industry.Uses Cases of Blockchain for the Real Estate Industry in 2021Now let’s look at some use cases of blockchain in the real estate industry in 2021 and what business results those use cases can bring.
The Real Estate Tokenization for Reducing Crowdfunding Barriers and Increasing Real Estate Liquidity
Tokens present a particular number of shares for some real estate assets. These tokens can be issued, bought, and sold through different blockchain platforms with cryptocurrency. This will make for a faster property sales process.It is also worth mentioning here that through this system, the barrier is reduced for all ordinary property investors. It further makes it easier to manage an overseas investment. In simple words, this will allow properties to now be traded like a stock on exchanges.Further, blockchain can revolutionize the entire commercial property market. This is due to the ability of blockchain technology to increase real estate liquidity. For example, Imbrex is a blockchain startup in real estate that is currently using the Ethereum blockchain.Through Imbrex, sellers, buyers, and agents can have free access to an extensive and rotating market of properties. One can also earn rewards by contributing to the data that keeps the whole thing running.
Smart Contracts for the Digitization of Contracts and Reduced Fees
Smart contracts in blockchain are very useful for the finance and banking industries. The same benefits can also be applied to the real estate industry as it also needs to proceed with a lot of transactions.With the help of this sort of technology, a property transaction that once involved endless amounts of paperwork can all happen digitally between the buyer and the seller. There will be a higher level of transparency and security of transactions than ever before.The transactions will be all automated and will require hardly any human involvement. Also, anything that is based on the blockchain becomes self-executed once it is set in motion. There is also less time and effort by the principals involved. There are also reduced costs and no chances of fraud.The application of this technology will also work by increasing the trust of all the parties that are involved. This will also reduce the need for legal counsel, which can be very costly. A good example of a realty company that uses this technology is Chomaway, which has partnered with Telia, which is a Swedish telecommunications giant.The goal of this organization is to digitize contracts for sale and property mortgages without any barriers. When this technology is in place, these sorts of documents can be authenticated beyond any doubt because of the security measures of blockchain.With the help of blockchain, everyone can create a smart contract even if one has no previous experience in the area. Individuals can e-sign the agreements that obligate both sides to follow the terms set in the contract. This would streamline the process that was once very messy and time-consuming.
Property Management Automation for Reduced Costs and Time Spent on Administrative Tasks
The use of blockchain technology in the real estate sector will eliminate a lot of manual paperwork and the use of multiple software programs. All of this can simply be replaced by blockchain technology for the betterment of the up-gradation of the entire industry. The entire property management process can become very effective and efficient with the help of a single decentralized application with blockchain-based smart contracts.
Transparent Data Tracking and Analysis for Better Decision Making
Blockchain applies a ledger technology that lasts for as long as the network is running. Because of this, all data on the property or the history of the building is recorded and is readily available to all future owners and investors. This means that blockchain can make real estate investing fairer to all the parties involved.On top of this, blockchain technology when combined with Big Data provides a better opportunity for more accurate tracking of customers. It also allows across borders and banks. This helps in reducing the risk of default taking place. Big data real estate players can now analyze data more accurately and make real-time decisions on the basis of that research.The ConclusionThere are currently several technical and legal objections in the real estate industry that are preventing its exponential growth. Blockchain can help in solving those problems. However, it cannot get everything completely off the ground as long as there is a lack of professionals with expertise in blockchain development in the market.