Few sectors rival the vibrancy of real estate. Whether it’s the demand for commercial hubs or the quest for dream homes, the allure of property investment is undeniable. Amidst this dynamism lies a technology ripe for evolution.
Enter blockchain. Like with the finance and supply chain sectors, real estate can benefit from the technology’s innovations. Imagine simpler ownership, smoother transactions and more transparent processes.
This infographic explores blockchain benefits, applications and challenges in the real estate sector. With blockchain in the fold, you can make buying, selling and owning real estate much more efficient.
Blockchain in real estate: By the numbers
While blockchain use in real estate is still relatively new, it shows great promise. Take a look at the numbers below.
• As of February 2022, 93 blockchain companies are dedicated to real estate. This finding indicates a growing interest and investment in applying blockchain to the market. It may also encourage other non-digital sectors to explore the technology. (Source: ZipDo)
• In 2020, the worldwide market for blockchain in real estate amounted to $328.3 million. With the technology establishing roots in other sectors like finance and healthcare, it comes as no surprise that it’s also making waves in real estate. There’s also the fact that blockchain presents opportunities for investors like yourself to diversify your portfolio. (Source: ZipDo)
• The global market for blockchain in real estate may reach $3.8 billion by 2028. Considering the market’s current value, blockchain in real estate will likely continue to rise. This projected growth suggests a sustained expansion of blockchain applications within the real estate market. (Source: ZipDo)
• About 86% of decision-makers in commercial real estate believe blockchain technology will affect the sector. This high level of confidence suggests that blockchain will play a significant role in reshaping future real estate operations and processes. (Source: ZipDo)
• With blockchain, homebuyers and investors can save up to $30,000 in fees for properties with a median value of $429,000. These numbers highlight blockchain’s cost-saving benefits and efficiencies in real estate transactions. Eliminating intermediaries and streamlining processes can reduce transaction costs and make real estate transactions more accessible to more people. (Source: Parcl)
• Propy, the marketplace that completed the world’s first real estate transaction on the blockchain, has handled $4 billion transactions for consumers and agents. This success proves the feasibility of using blockchain to facilitate secure and transparent real estate transactions, which can lead to further adoption of the technology. (Source: Propy)
6 benefits of blockchain integration in real estate
Whether you’re an ordinary homebuyer, aspiring property investor or seasoned broker, the distributed network model of blockchain can offer real estate the following perks.
1. Transparency
Blockchain maintains an immutable ledger of all transactions, ensuring data integrity and preventing unauthorised alterations without consensus from network participants. Using the technology in real estate ensures every transaction is securely recorded and easily accessible to property sellers and buyers, which can foster trust and reduce the risk of fraud or manipulation.
2. Access to global and public assets
As an investor, you want to seek properties abroad that can diversify your portfolio, maximise low prices and even generate passive income. However, complex regulations and processes make it challenging to secure real estate.
Blockchain’s transparent and secure platform is ideal for global real estate investment. Blockchain-enabled automation can speed up transactions and maintain secure ownership records, making acquisition faster and offering opportunities to invest in profitable markets.
By means of smart contracts, regional legislation can be programmed into assets to ensure regulatory compliance up-front.
3. Faster transactions
Real estate deals often span lengthy periods and involve many steps. It’s not as simple as paying cash and shaking hands with your broker. You may have to create an escrow account, search the title, negotiate offers and accomplish comprehensive paperwork.
Blockchain can streamline the buying, selling and leasing processes. Smart contracts execute real estate transactions more efficiently and remove middlemen, shortening the time to acquire or sell a property.
The technology also allows you to pay with digital assets. In the case of high throughput blockchains like BSV, settlement can be reduced to a shorter time than fiat transactions.
4. Fraud detection and prevention
Fraud risk exists in the real estate market. A study in 2024 found that 1 in 20 Americans who bought or sold a home in the last three years lost $70,000 due to stolen down payments and net proceeds. Though this demographic is small, it validates the presence of malicious activity in the market.
Fortunately, blockchain’s immutable records and cryptographic security measures make it highly resistant to fraud. The technology provides a tamper-proof system for verifying property ownership and transaction histories, reducing the risk of scams and deceit.
5. Reduced cost of automation
As mentioned, smart contracts automate tasks such as contract execution and document verification. They minimise the need for manual intervention and reduce administrative overhead. This efficiency saves time and lowers operational expenses, allowing brokers to allocate resources more effectively and focus on providing value-added services to clients.
Plus, smart contracts reduce the need for extensive paperwork and manual processing. If you’re a homebuyer or investor, this means a streamlined and efficient purchasing experience. Blockchain allows you to rapidly secure desired properties with fewer administrative hassles.
6. Improved liquidity
Tokenisation allows for fractional ownership of real estate assets, making properties more liquid and affordable for homebuyers and investors. Blockchain also supports your investment goals, as you can buy and sell smaller stakes in high-value properties more quickly while diversifying portfolios and mitigating risk.
Simply put, you can sell tokens representing a part of your assets instead of selling your whole property, creating diverse investment chances for everyone. This approach can make it easier for fellow investors to own assets.
Blockchain applications in real estate
How exactly can blockchain support the real estate market? Below are specific areas that can directly apply blockchain principles and processes.
• Data management
Blockchain’s immutability guarantees secure and tamper-proof storage of real estate data, including property records, transactions and ownership details. The technology reduces the risk of data manipulation or loss while providing a transparent and accessible database.
• Property management
Overseeing a property is more than just ensuring tenants pay their dues on time. It also involves creating and renewing contracts, arranging repairs and complying with landlord-tenant laws.
Blockchain technology improves efficiency and reduces administrative overhead. With smart contracts, you can automate rental agreements, maintenance requests and tenant communication.
• Mortgage and loans
With blockchain, you can digitise documentation, verification and payment processes related to mortgages and loans. This way, you can minimise delays and avoid paying late payment fees.
• Property tokenisation
Blockchain makes property tokenisation possible, making ownership shares easier to manage, trade and divide among investors. As a result, you can buy smaller stakes in properties and easily transfer them. Fractional ownership also allows you to diversify your investment portfolio, reducing the risk of massive losses.
• Metaverse property
With the metaverse economy potentially reaching $5 trillion by 2030, it won’t come as a surprise if many people start investing in digital properties as well. Blockchain can help in this regard, ensuring secure and provable ownership of virtual real estate assets.
• Land and property registries, sales and reassignment
Blockchain-based land and property registries provide a transparent and immutable record of real estate transactions. They facilitate efficient property sales and transfers while reducing the risk of fraud or disputes over property rights.
• Urban planning
Traditional property development often overlooks valuable input from homebuyers and investors, leaving them feeling excluded from the planning process. With blockchain-based planning platforms, you can access educational resources and provide feedback to engage with real estate developers.
More broadly, blockchain can support public-private partnerships regarding smart city management. Nokia made this possible in 2018 with Sensing as a Service, a blockchain-powered Internet of Things monitoring platform. It uses existing base station sites and sensors to detect unusual environmental activities such as illegal construction or air pollution.
• Investor and tenant identity
Blockchain-based identity verification systems enhance security and privacy in real estate transactions. It’s easier and faster to check tenant and investor backgrounds, prove property ownership and share important documents like insurance proof and credit history as needed.
• Payments and leasing
Tenants and property owners can sign agreements and pay dues directly on the blockchain, making the process smoother without needing manual checks. Additionally, smart contracts can automate payments and fees, minimising disputes between landlords and tenants.
• Accounting
If you manage multiple properties, it can be difficult to track your cash flow. Fortunately, blockchain enhances transparency and accuracy in real estate accounting. The technology provides a tamper-proof audit trail of financial transactions, simplifying reconciliation and ensuring compliance with regulatory requirements.
5 roadblocks of blockchain implementation in real estate
Like other technologies, blockchain isn’t perfect. Its application in real estate is still in its infancy, so it’s crucial to know the challenges ahead.
1. Regulation
The regulatory landscape surrounding blockchain in real estate is still evolving. Moreover, different countries have individual laws about technology and real estate. Clear rules and regulations are necessary to effectively manage digital property records and smart contracts.
The BSV blockchain is designed to work within the legal system and is fully compliant with all current rules & regulations, making it a good choice to ensure upfront compliance.
2. Cost
Similar to adopting new and evolving technologies, using blockchain to buy, sell and trade properties can be expensive and complicated. For instance, converting physical property records to digital copies may take time.
Additionally, implementing blockchain in real estate involves initial investment costs for development, integration and training. If you’re a budding property seller, this challenge may temporarily deter you from embracing the technology due to the upfront financial commitment.
The alternative is to adopt a public blockchain infrastructure like the BSV blockchain, which provides the best of features (like smart contracts) without undertaking infrastructure costs.
3. Security
While blockchain offers inherent security benefits, it’s not immune to vulnerabilities like smart contract bugs and insider threats. For this reason, robust security measures and continuous monitoring are essential to safeguard sensitive real estate data.
4. Resistance to change
Traditional real estate stakeholders may question blockchain due to systemic inertia, scepticism or fear of disruption. Hence, it’s crucial to invest in education, advocacy and demonstration of the technology’s tangible benefits to overcome resistance and foster acceptance.
5. Expertise
Building and managing blockchain solutions require specialised technical expertise in development, smart contract programming and cybersecurity.
The problem is that these skills are sometimes scarce and expensive. Without adequate internal expertise or access to qualified professionals, it can be difficult to implement blockchain technology in real estate.
Decentralised real estate is the future
Blockchain in real estate holds immense promise. It can simplify processes, increase security measures and create new market opportunities for buyers and sellers. While it’s still evolving, it’s worth monitoring the technology’s progress in real estate.
The BSV blockchain is at the forefront of this progress, handling millions of transactions per second with top-notch efficiency and transparency. You can learn more about this infrastructure in our eBook, ‘What is blockchain?’
