Blockchain Use Cases In Real Estate & Its Application
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Have you heard about the benefits of adopting blockchain in real estate? Or do you still believe this technology won’t be of any use to traditional businesses?
Indeed, during the last years, blockchain development trends have also emerged in the real estate industry and are on the rise. This technology brings all kinds of innovations and benefits. The range is vast, from improving the safety of purchase or sale transactions and automating property management to implementing more intelligent decision-making.
Hence, blockchain can transform the commercial real estate market, making it more advanced and innovative. In this article, we reveal how your business in real estate can profit from blockchain adoption before your competitors do that.
Softermii's extensive experience in blockchain and real estate can help you with it. By learning more about our cases like Real Estate Association and Rently, you will discover how your company can excel by implementing this cutting-edge technology.
Why You Should Care About Using Blockchain in Real Estate
If you are still hesitating on what will be the true impact of blockchain on the real estate industry for the next few years, it’s better to look at some statistics. That way, you can fully understand the capabilities of the technology.
In 2021, companies from various industries spent about $6.6 billion to implement blockchain technology in their processes. It is almost 50% more than in 2020.
But that’s not when the investments in blockchain slow down. According to the IDC Worldwide Blockchain Spending Guide, the global spending on this innovation will grow by an average of 48% annually over the forecast period from 2020 to 2024. It indicates the rapid pace of blockchain technology adoption globally.
By the way, many different industries have started to apply this technology to improve the effectiveness of their services and save costs. The following chart shows which sectors invest in the blockchain the most:
Hence, as a part of the retail industry, real estate can benefit from blockchain implementation for company growth. Let's find out more about the advantages and disadvantages of blockchain in real estate. Perhaps in the near future after reading, you will think about the development of software for real estate on the blockchain.
What Main Problems Blockchain Application Solves in Real Estate
The commercial real estate industry has experienced a drop in growth over the last few years. It faced some problems that remain objections to this market expansion.
At the same time, blockchain development helps create solutions to resolve these issues. So, let’s reveal what the critical real estate industry problems are and how blockchain applications can help to overcome them:
Lack of Transparency and Slow Operations
One of real estate’s biggest problems is the total lack of transparency between the contractors, which causes corruption, fraud, and money laundering and prevents industry growth.
Yet, one of the main benefits of blockchain in real estate is shared secure databases.
Leasing, purchasing, and sale transaction records become common knowledge, so realtors don’t end up stepping on each other’s toes. Multiple listing services, which collate property-level information from the private databases of brokers and agents, are a prime example of why this new tech is so critical.
Many independent parties can also use the blockchain-enabled database, but only those that should legitimately have access to it. Hence, only contractors involved with real estate management, such as the owners, tenants, lenders, investors, operators, and other service providers, can always have stable and fast access and abilities to modify or add needed information.
With blockchain, real estate participants can access and share the same blockchain tech. They don’t need to have the data integrity fears they once did.
Therefore, blockchain allows building a platform for all parties for secure, transparent, and faster communication, automation, tokenization, and access to real-time information, all of which are highly valued in real estate.
Unsecure Titles or Data Management
Another real estate problem is improper record-keeping, which is critical for fast business processes.
With blockchain, all entities get digital identities that cannot be mistaken or appropriated. It leads to more transparent record-keeping with property titles, liens, or financing. Now, this technology allows making title companies to be disintermediated through blockchain.
Slow and Unsafe Transactions
Many real estate transactions come with conditional clauses, need a long-time to proceed, and must be transferred safely. Thus, the transaction can be more efficiently executed through blockchain.
For example, a purchase-sale transaction could depend on title clearances or loan approvals. With blockchain, real estate entities can check whether those transactions have been enacted and conditions have been met.
Another problem with real estate is that it needs to be more secure and protected against malware. Blockchain solves that by providing a higher security standard of data encryption.
For example, it allows encrypting all data transactions in the database to prevent any data breach, as we have implemented for the Extobit cryptocurrency exchanger project.
Here is one more example that blockchain is worth employing: a Swedish tax agency that uses this technology as a solution in real estate transactions with an explanation of how it operates.
So, blockchain in commercial real estate businesses can ensure safety and high speed of transactions.
Top 8 Blockchain Use Cases in the Real Estate Industry
We now know that blockchain development solves the real estate sector’s major issues, enabling connectivity and security among real estate businesses that were previously unimaginable.
But let’s look at more details at real-life examples of blockchain applications in real estate and what business results it brings:
1. The Real Estate Tokenization
One of the most popular uses of blockchain in real estate is tokenization. Tokens represent a particular number of shares for some real estate assets that can be issued, bought, and sold through blockchain platforms with cryptocurrency. It speeds up property sales and lowers crowdfunding barriers.
What is worth mentioning is that through this system, the barrier is reduced for ordinary property investors. Overseas investment in commercial real estate also becomes more manageable. Simply put, properties can now be traded like a stock on exchanges.
Generally, blockchain can revolutionize the entire commercial property market thanks to the ability to increase real estate liquidity. That is why the tokenization of real estate using blockchain technology is fully justified.
For instance, look at Imbrex. It is a real estate blockchain startup using Ethereum technology. Through it, sellers, buyers, and agents can have free access to an extensive, rotating market of properties. They even earn rewards by contributing the data that keeps the whole thing running.
For example, within this platform, you can invest in any listed property overseas without needing to be physically presented here.
Soon, thanks to commercial real estate technology companies, ordinary investors may be able to stake a claim to assets they would not be able to purchase through existing means.
2. Smart Contracts
The blockchain uses in real estate can also be with the help of smart contracts.
Smart contracts, which are incredibly beneficial for the banking and finance sectors, are among the most profitable blockchain innovations. The real estate industry, which must handle numerous transactions, might also incrementally gain from this technology.
With this sort of tech in place, a property transaction that once involved nearly endless paperwork can now take place digitally between the buyer and seller. That transaction has greater transparency and security than was previously possible.
The transactions are all automated and hardly require any human interaction. Once set into action, everything built on the blockchain becomes self-executive. There is less time and effort by the principals involved, not to mention reduced costs and no chance of fraud.
An example of a blockchain realty company using this technology is ChromaWay, which partnered with Telia, a Swedish telecommunications giant. Their goal is to digitize contracts for sale and property mortgages without barriers. When the tech is in place, blockchain security measures can authenticate these documents beyond doubt.
Blockchain technology allows real estate startups to create a smart contract, even if they have no previous experience in this area. The agreements that bind both parties to abide by the contract’s terms can be electronically signed, greatly streamlining what used to be a messy and time-consuming procedure.
3. Security and Control Over Transactions
Blockchain use cases in real estate can also lead to a reduced risk of fraud. You might be dealing with someone trying to buy property from you, or you are attempting to buy it from them. You don’t know them, and therefore there is no reason for you to trust them implicitly.
With blockchain tech, you don’t have to. Property transactions no longer have to go through third parties because blockchain eliminates the possibility of anything underhanded.
Extensive documentation and the involvement of various intermediaries have had to exist in the real estate industry up till now. That has led to slow, expensive, and opaque modes of financing and payments for property transactions.
If you think about how to apply blockchain in real estate, the way you can leverage it to streamline payments and improve the security of real estate transactions has to be one of the first things on the list. Blockchain can be used to prove that parties have the funds needed for the transaction in both rental and purchase scenarios.
Soon, by integrating blockchain technology globally, financial and payment systems will be secured and transparent. They will be stored so that either party can return and reference them whenever they wish.
Read Also: How to Build a Rental Marketplace Platform
4. Property Management Automation
The use of blockchain technology in real estate will eliminate manual paperwork and the need to use multiple software programs. All of that will be replaced by blockchain tech for betterment and up-gradation.
A single decentralized application with blockchain-backed smart contracts will make the whole property management process efficient. It will lead to reduced costs and time spent on administrative tasks.
5. Transparent Data Tracking and Analysis
Blockchain applies ledger technology that lasts as long as the network is running. Because of this, all data on the property or the history of the building is recorded, readily available, and transparent to all future owners and investors. Blockchain can help make real estate investing fairer for all parties involved.
Moreover, combining blockchain technology and big data provides a better opportunity for more accurate tracking of consumer and owner histories across borders and banks. It lessens the possibility of default. Big data real estate players can now better analyze information and make data-driven decisions.
6. Shared Ownership and Investment
Blockchain technology transforms real estate by enabling fractional ownership and investment. Purchasing real estate requires significant investment, especially given the steady rise in property prices. Through the blockchain, investors can pool their resources and buy their share of a property they could not purchase independently.
Furthermore, shared ownership enables investors to sell their ownership stake whenever they want. It also allows them to avoid self-management of real estate: its maintenance or lease, which often requires considerable effort.
7. Access to Secondary Market Opportunities
Tokenizing real estate assets creates opportunities by granting access to the secondary market. It is made possible by digitally reproducing any asset, lowering the cost of transactions, and making them accessible worldwide.
Using blockchain in real estate allows you to turn illiquid assets into liquid ones and attract more investors. As a result, anyone can buy an asset in digital form or a share of it and then sell it on the secondary market.
8. Global Asset Distribution
Most of what we mentioned above, such as real estate tokenization, increased liquidity, smart contracts, and better transaction transparency, is even more significant if you look at it globally. The use of blockchain in real estate knows no bounds.
This technology makes it possible to create a universal system of buying and selling property with tools understandable to customers and sellers worldwide. Smart contracts will enable you to automate all sales transactions and confirm their validity in real-time. Smart contracts in commercial real estate will enable you to automate all sales transactions and confirm their validity in real time.
Regardless of business hours or weekends, all transactions on the blockchain are processed almost instantly. As a result, blockchain technology for real estate reduces the limitations caused by geographical factors and offers a universal system for selling property.
Well, these use cases for blockchain in real estate have shown you how promising this technology is in this business sector. And now, let's look at the main challenges.
Existing Challenges to Blockchain in Real Estate
Well, blockchain for real estate development has some difficulties. Technical and legal objections are now the most significant challenges to blockchain for real estate.
Blockchain real estate projects can’t get completely off the ground until this tech is studied and perfected. The market is still experiencing problems since there aren’t enough experts in blockchain development.
Blockchain isn’t still adopted by legal regulations and by all states. While some blockchain technologies are already in use across various real estate apps, some consumers don’t completely trust them yet, as it is not lawfully approved. Once the blockchain is more widely accepted and understood, expect it to become a true staple of the real estate industry.
Blockchain adoption in real estate is predicted to take 10 to 15 years. But it is coming, and once the pieces begin to fall in place more rapidly, expect a complete overhaul of the industry that will benefit everyone involved.
Moreover, there are still many undiscovered things on using blockchain combined with AI, Ml, big data, and IoT technologies that can allow building solutions to various problems in the real estate industry today.
Blockchain real estate transactions may seem a bit unfamiliar at the moment. However, they have so many practical applications in security, ease of data access, and the various other points previously mentioned. Because of that, you can look for this tech to disrupt the real estate or other business landscape for good in the coming years.
Softermii’s Experience in Using Blockchain for Real Estate
At Softermii, we have considerable experience in blockchain and real estate. Our software is also enhanced by IoT, AI, video conferencing solutions, AR, and VR. All these innovations combined with blockchain can make your product a market leader.
Let’s take a look at some of our cases in the real estate industry.
Real Estate Association
Real Estate Association is a mobile application we developed for the French Real Estate Association. It is a decent tool for buying and selling property that provides up-to-date real estate information.
The Association asked us to solve a critical problem: the need to display information about the property in real-time.
We conducted a market business analysis to identify the product’s key features and implemented them in our design and code. We made sure that our mobile solution brought together all the property information and displayed it in real-time.
As a result, our application is already used by more than 3,900 real estate agencies. Our product has also received the MobileWebAwards as the best mobile real estate app.
Rently is a web and mobile platform that uses IoT in real estate. The property demonstration process has never been more efficient with this digital product.
Our team needed to improve the platform’s usability and implement IoT to demonstrate real estate.
Our team analyzed the platform to identify usability issues and create a strategy to address them. As a result, we formed new user streams and completely changed the visual part of the platform. We have also taken care to ensure an efficient IoT property showcasing process.
As a result, our platform has gained widespread popularity in the biggest US cities.
Blockchain in real estate will become more and more necessary every year. Our advice to you is to implement it today. We can help you create a blockchain-based real estate solution here.
At Softermii, we have strong expertise in real estate software and app development of different types and levels of complexity. While combining it with our experience in custom blockchain development, we can help you figure out the best set of functionalities, progressive stack technologies, and intuitive design that meets all purposes for your solution.
Get a full free quote on your project from our specialists in one click!
Frequently Asked Questions
What are the most common blockchain use cases in real estate?
Real estate and blockchain intertwine in the following matters: real estate tokenization, smart contracts, security and control over transactions, property management automation, transparent data tracking and analysis, shared ownership and investment, cost reduction, and urban planning.
What effects will blockchain have on property management?
The use of blockchain technology can help automate the property management process. As a result, you have less manual paperwork, reduce the time for administrative work, and save money.
What are the effects of blockchain on land and property registries?
Blockchain technologies help digitize paper documents and create electronic land and property registers. As a result, it promotes greater transparency in the purchase and sale of property and prevents the loss of documents or fraud.
What effects will blockchain have on urban planning?
With the help of the blockchain, you can launch urban planning platforms, which the public can use. In this way, people will have the right to vote and be able to influence urban planning processes.
What effects will blockchain have on building real estate?
Using blockchain in real estate development, you can ensure the transparency of the supply chain and procurement, while smart contracts automate contractual arrangements and payment. It will greatly simplify the interaction between contractors, subcontractors, and construction managers.
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