People think blockchain technology is all about Bitcoin. It’s not. It can change any industry. It has influenced various financial services such as foreign exchange, remittances, and payments. Today, there are more than a thousand cryptocurrencies and initial coin offerings. They provide solutions and different approaches to our day to day financial life. For example, startup loans, stock investing and venture capitals.
The Future of Commercial Real Estate
Blockchain has a significant impact on the real estate industry and its processes. Property registration, money transfer, and agreements can be better. There are a lot of opportunities for blockchain for sectors such as real estate.
The blockchain technology can lower the costs of a company. It can also provide faster operations without compromising security. Companies who take advantage of blockchain can reap the benefits of:
- Fewer risks
- Reduced error rates
- Lower capital need
Blockchain can help the verified investment in a small part of massive development. As a result, the creation of fractional ownership can turn into a possibility.
Blockchain shows real estate a future of transparency and decreased chances of fraud. It can also speed up the processes which take weeks and months to process. Plus, reduce the costs of having to pay for a lot of third parties.
- Unlocking a vast investment capital if everyone can access the market.
- Having a digital lease that runs on automatic mode to withdraw service charges
- Rent payments without any human error
- Utilizing a self-governing system that accounts, balances and records each transaction
- Wouldn’t that be great? There will be:
- No more manipulation of data
- Lesser fraud possibilities
- More secure files
- A connected system
Blockchain can turn this into reality and change the way the real estate industry works.
Making the Dream Work
Several real estate companies have integrated the blockchain technology with their processes. One such company is i-house which splits and allocates assets to financial institutions. The method uses IHT smart contracts. Because of this, ordinary users can invest a small amount of their money in real estate.
According to Deloitte, blockchain has more potential for leasing contracts for properties. Especially ones with more number of tenants and shorter-duration leases. Let’s take a look at how companies can adopt the blockchain technology in the real estate’s vital areas.
First, companies who want to use the blockchain technology need to educate themselves. They have to understand how it works. See if its limitations and benefits are compatible with their offered services. Blockchain may or may not be the solution to the inefficiencies in the real estate processes. If it is not implemented, might increase the costs instead of decreasing it.
A real estate company should check the applications of the blockchain technology. Then, relate it to the industry. Understand and compare the actual value propositions. Check the traditional system and blockchain solutions.
Unlike the new technologies such as cloud and mobile analytics, blockchain is confusing.
- Understand how it works
- Know why blockchain is essential
- See what it’s all about
These are vital factors that a company should follow, especially if they plan on adopting this technology.
2. Create and Collaborate
The second part is deciding on collaboration opportunities. Of course, to be able to survive the harsh competition, a company must team up with a few others. In doing so, they will be able to come up with something bigger and better. They have to research the issues and opportunities common with competitors and peers. Then, see which blockchain technology platform they want to leverage. Companies have to think of the long-term usage and the compatibility. Finally, check out who the company should collaborate with for a better service.
There is not enough blockchain experience among the traditional real estate companies. To be successful, one should consider partnering with at least one vendor. But, before closing the deal, the company has to understand what a soon-to-be partner can offer. Are they willing to invest in a solution that meets the company’s needs?
Companies need to enable the implementation of the blockchain technology. They must understand existing solutions that help with the company’s digital identity. Then, see how the integration of digital identities can create better applications. In today’s world, privacy is a crucial matter. The company has to decide whether to focus on privacy in a blockchain application. Then, check which blockchain model are they more comfortable using? Is it hybrid, private or public? They must know the impacts of the current regulations in their blockchain design.
Companies should know how the blockchain works and have created strategic alliances. Then, they now have to focus on facilitating the implementation. Companies can research on the different ways of creating digital identities. Their blockchain-based applications can have properties, enterprises, and people as the key enablers.
Despite blockchain’s immutability, there are still vulnerabilities with security and privacy. As such, a company must have an appropriate focus in this. One of the critical factors in choosing a blockchain is the level of trust and risk assessment. Is it public, hybrid or private blockchain type?
As of today, progresses in the blockchain technology are faster than the regulations. But, in the long run, legal precedents for the blockchain technology will catch up. Government bodies will oversee the public blockchains. Private agreements will manage private blockchains.
Today, the world has a lot of continuous technological advancements. A lot of technology promise to improve a business’ and its profitability. Companies need to adapt to be able to survive these changing times. Blockchain technology is evolving. It is time they revisit their business models, processes, strategies, and financial plans.
Blockchain technology has the potential to increase the real estate’s efficiency. It can also provide transparency and decrease costs by removing the inefficient processes. Commercial real estate companies looking to upgrade should consider blockchain in their operations. It’s only a matter of time before we see a worldwide use of this technology in our real estate transactions.