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If adopted by commercial real estate,
the potential impact of blockchain
on industry processes and practices
could be enormous. Just like that
dollar bill, the blockchain could provide
information regarding all buyers, sellers,
title work, reporting, lease comps
and vendor work on any individual
commercial property. Having this
information at your fingertips could
cut out paperwork, enhance market
transparency and shorten the speed to
transact from days/weeks/months to
minutes or seconds.
With the digitization of smart real estate
contracts, which have been designed to
replace leases, blockchain could:
Enable a commercial property
to have a digital signature
containing details, such as building,
performance (including rental
and occupancy rates) and legal
information. This information could
be accessed online by authorized
parties in seconds.
Allow for commercial real estate
deals to transact in seconds rather
than days, weeks or months.
Better facilitate the commercial
property sales and/or leasing
payment process, once a deal has
been concluded.
Not only will real estate transactions
begin to resemble the buying and selling
of stocks/commodities with blockchain,
but properties in bustling areas could
change hands many times a year, many
times a month, or even many times a
week, depending on the strategy.
In addition, as publicly-accessible
ledgers, blockchains can make all
kinds of record-keeping more efficient.
Property titles are a case in point.
They tend to be susceptible to fraud,
as well as costly and labor intensive to
administer.
To this end, a number of countries
are undertaking blockchain-based
land registry projects. For example, in
Sweden, the government land registry
is already testing all land titles and
transfers on blockchain. It aims to make
property purchases quicker, cheaper
and more secure by holding all title
information digitally and enabling virtual
transactions.
Picture a spreadsheet that is duplicated thousands of times across a network of
computers. Then imagine that this network is designed to regularly update this
spreadsheet and you have a basic understanding of the blockchain. Information held
on a blockchain exists as a shared – and continually reconciled – database.
A dollar bill provides a good analogy for how blockchain technology works. If handed
a dollar bill, you have no idea where that dollar bill has been or what it has purchased
in the past. Blockchain can provide a history of where that dollar bill has been, what
transactions it has been used in, and where and what it’s been traded for to better
identify its worth and value.
WHEN ADOPTED BY THE CRE INDUSTRY,
BLOCKCHAIN TECHNOLOGY WILL MAKE
LEASING, BUYING AND SELLING OF PROPERTY
MUCH MORE INFORMED, FLUID AND EFFICIENT.
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The Future of the CRE Industry