Since the recession, the commercial real estate industry has experienced exceptional growth. Market prices have peaked significantly and have been predicted to increase in 2019. This makes the industry as welcoming as ever. Even if the market is bombing, investment isn’t as convenient as it should be at this time. From a lack of funding options to the issue or fraud and high cost of intermediaries, the industry is in serious need of an intervention. This intervention can only be provided by blockchain technology.
How Blockchain Will Redesign The Commercial Real Estate Industry
As you probably already know, blockchain is an immutable ledger that records transaction data. It is the top technology for accessibility, transparency and traceability. These properties, when implemented in real estate, can change the game for the better. For starters, with blockchain technology, there is no need for intermediaries. This would save the costs for paying one agent after another. Also, using cryptocurrencies, an application of blockchain technology, to pay for properties will eliminate the cost of bank fees. Fees associated with third party platforms like escrow will also be bypassed as smart contracts can be customized to meet the needs of the user.
Also, cryptocurrencies are tokenized making crowd ownership of property possible. People who cannot afford to purchase whole real estate on their own can buy it in parts. These investors will get transferable tokens of their shares. These tokens can be verified on the blockchain making real estate more accessible.
Then there is the issue of fraud. How can blockchain technology prevent fraud in commercial real estate? The blockchain is immutable. It can be used to validate documents efficiently without fear of human error or fraud. When properties need to be transferred, the records are added to the blockchain followed by the formation of a comprehensive history. During sales, a buyer can quickly verify if the seller is being fraudulent.
Blockchain Technology As Applied In Real Estate
Already, many companies are beginning to implement blockchain technology in real estate. For example, i-House.com recently implemented ATO (Asset Tokenization Offering) projects. These projects give users the power to crowdfund real estate development projects with a cryptocurrency created by the company.
This ATO model increases real estate accessibility through a platform that is verifiable. This project is going to disrupt the industry positively in the long run. The founder of the company, Ricky Ng had this to say:
“Our aim is to create an ecosystem that promotes a shared economy asset management on a global scale. L i-House ATO offer developers, real estate owners and end users a means to share and own assets easily”.
Bitcoin (BTC) Price Today – BTC / USD
One thing is clear, blockchain technology is going to have a disruptive effect in the real estate industry. It is going to change everything from how transactions are initiated to how they are handled and completed. When there are better incentives in place, more investors will be propelled to invest in the commercial real estate market. This will, in turn, boost economic growth.