Blockchain Adoption in Real Estate

2022-03-02, 05:00

[TL;DR]

- Real estate, which uses paperwork traditionally, has begun to expand globally through blockchain technology. The technology has enormously impacted the real estate industry by offering a new means for buyers and sellers to connect seamlessly.

- The inclusion of blockchain technology in real estate has improved confidence and decreased reliance on real estate brokers while also lowering costs, speeding up home transfers, and, most crucially, networking between clients. As a result, many investors are interested in learning more about how blockchain might be used in real estate. Keep reading to understand the details!

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How does blockchain work in real estate?

Blockchain smart contracts have made it possible for real estate companies to tokenize tangible properties such as land. When these properties are tokenized, the transfer of ownership and proof of ownership becomes highly transparent and immutable. That is when Mr. A buys a unit of land, he can prove he's the owner seamlessly because the records are kept safe and vivid on the blockchain.

Real estate assets on the blockchain is tokenized- and as the name implies, tokenization is the process of converting an equitable stake in a property into a token. A token is typically a store of value and a digital representation of said equitable interest. Tokens are used to document, store, and verify an asset's ownership.

Real estate can be easily exchanged, sold, and liquidated over blockchain real estate platforms once it has been "tokenized." Tokenizing real estate and using blockchain to conduct transactions is faster safer and eliminates the need for an expensive third-party escrow business.

How Blockchain has changed Real Estate

Blockchain real estate applications can democratize the entire industry and make it available to anyone while facilitating faster and more secure exchanges.

How has blockchain enhanced the real estate industry?

1. Availability of Online Marketplaces and platforms
Blockchain real estate applications allow more people to be able to participate in the real estate industry without fear of malicious exchanges. Real estate technology has always been primarily concerned with listings and connecting buyers and sellers. Still, the introduction of blockchain technology provides new ways to trade real estate and enables trading platforms and online marketplaces to support real estate transactions more securely and comprehensively.

2. The exemption of Intermediaries
Intermediaries, i.e., Brokers, lawyers, and banks, have long been part of the real estate ecosystem. However, the application of blockchain technology in real estate ushers a shift in their roles and assumes the functions of listings, payments, and legal documentation, while eliminating intermediaries, As a result, buyers and sellers get more value for their money since they save money on the commission and fees intermediaries usually charge. This also speeds up the process by eliminating the back-and-forth between intermediaries.

3. Liquidity of Real estate Assets
Real estate has always been considered an illiquid asset since it takes time for sales to conclude. However, in the case of cryptocurrencies and tokens, it is theoretically possible to readily trade them for fiat currencies through exchanges. Therefore, the application of blockchain in Real estate can allow assets to be readily traded since digital tokens on the blockchain represent ownership in a property. Owners and investors easily cash in on their tokenized assets instead of waiting for a buyer who can afford the whole property, before they can liquidate and get value off their property.

4. Ability to obtain Fractional Ownership
Tokenization of real estate doesn’t only provide owners and investors with faster access to funds but also lowers the entrance barrier for potential owners and investors. To obtain property, most ventures demand a large sum of money upfront. Alternatively, real estate tokens enable investors to pool their funds in purchasing more expensive properties. It's no longer required to spend a large sum of money on a single investment. Instead, buyers are allowed to engage in fractional ownership.

5. Costs reduction
The transparency associated with a decentralized network can lead to the reduction of costs in real estate transactions. Any transaction executed over the blockchain cuts costs by eliminating the need for escrow agencies or payments of professional fees and commissions, i.e, inspections costs, registration fees, loan fees, and taxes associated with real estate. Costs can effectively be reduced or even eliminated if Real estate platforms continue to automate blockchain processes and make them part of the system.

6. Digitized identities
A combination of blockchain technology and digital identification eliminates the issues with physical identity verification, as well as speeding up some pre-transaction processes such as underwriting, financial evaluation, and obtaining a mortgage commitment.

Real estate companies using blockchain technology

1. UBITQUITY
UBITQUITY is a blockchain-based SaaS (Software-as-a-Service) platform for tracking the lifecycle of any property. The unanimity API of the platform is used to confirm the legitimacy of information linked to ownership, ownership history, and transfer records using blockchain technology. This takes advantage of the benefits of blockchain while also increasing transparency.

2. ATLANT
ATLANT created a platform that makes real estate and rental property transactions easier using blockchain technology. ATLANT allows for the tokenization of an asset while essentially handling it as if it were a stock, and then liquidating it through a token sale, i.e, exchanging for fiat currencies, with buyers who would, in turn, receive a percentage stake in the property.

3. Propy Inc
Propy is a blockchain-based, global real estate marketplace that uses smart contracts to execute international property transactions. The platform enables brokers, buyers, and sellers to utilize the power of smart contracts that ensures better transactions and help speed up the real estate process.

4. PropertyClub
PropertyClub is another platform that employs blockchain technology and smart contracts to enable users to conduct real estate transactions digitally and securely. Using cryptocurrencies such as Bitcoin or PCC (PropertyClub Coin), as well as the tokenization of real estate assets (via property unique security tokens) to improve customer experience.

5. Harbor
Harbor is a blockchain real estate platform that allows private securities, like real estate assets, such as building ownership, and land to be tokenized to boost market liquidity and transparency.

6. Alt estate (ALT)
Alt. Estate is a blockchain-based system for real estate tokenization and tokenized real estate asset exchange. It allows users to purchase and sell tokenized real estate assets in a secure, fast, and seamless manner with low transaction fees.

Some Blockchains that support Real estate:

1. Bitcoin (BTC)
The use of blockchain technology to facilitate crypto-to-crypto transactions has the potential to revolutionize the real estate market. A real estate transaction can be completed purely in Bitcoin, with no need for currency conversion. Bitcoin in real estate enables crypto investors to profit from cash flow.

2. Ethereum (ETH)
Ethereum is considerably superior to Bitcoin for buying real estate because it has a faster transaction time and lowers transaction fees. It also features the smart contracts feature, which offers several new opportunities in the real estate sector.

3. Algorand
Lofty AI can develop a highly scalable tokenized real estate marketplace on Algorand's blockchain, which guarantees efficiency, accuracy, and transparency while offering low transaction fees. Algorand basically serves as a record of real estate asset ownership, asset-related data, loan transaction proof, and important loan documents.

4. Cardano
Cardano adoption in the real estate industry allows buyers to purchase properties using Cardano token ($ADA).
Recently, Prometheus International, a real estate developer, sold two luxury residences on the Portuguese island of Madeira for a total of €4.1 million ($4.7 million), paid in Cardano ($ADA).

Conclusion

The adoption of blockchain technology in real estate has enabled people to recognize the benefits of fractional ownership investment opportunities, which provides investors with the diversity they need in today's volatile business climate. In addition, blockchain can significantly speed up typical real estate transactions, bypass the traditional escrow process, and provide additional layers of security for all parties involved.

Author: Gate.io Observer: Olatunji. M
Disclaimer:
* This article represents only the views of the observers and does not constitute any investment suggestions.
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