The real estate industry is the largest asset class in the world, and it continues to play a massive role in the global economy. Though the industry has come a long way from pen and pencil to the digital platform, there is still a lack of trust and transparency in transaction and record management.
There are myriad issues that severely plagued the real estate sector. Some of them are:
Not Accessible to Everyone
The majority of real estate investment is still in the hands of riches; it is almost inaccessible or limited access to the average person who wants to invest. Most importantly, there are a lot of entry barriers to investing in foreign real estate projects – citizenship, accountants, credit policies, international bank accounts, and much more. Along with these issues, you need to go through several intermediaries to invest in the property of your choice.
Buying a property in a foreign land is not so simple; you need to deal with new set rules and regulations. By doing so, you will have to pay some extra fees like international tax, currency exchange fees, legal fees to an attorney, and as a lot of middlemen involved, fees multiples which you won’t have any control over.
Lack of Transparency
The realty sector has been predominantly occupied by a closed network of firms and a few who hold a tag of “rich.” They hold a large chunk of property and investment. It poses a lot of friction, lack of transparency, corruption and dishonesty in the entire system.
Real estate Industry is where a significant amount of money laundering and tax evasion takes place. The transparent system can assist everyone in combating corruption, tax evasion, etc.
- The most significant problem where tech-intervention is much needed is in liquidating the assets. In the existing system, it is not very easy to liquidate the asset.
- Liquidation means how easily we can convert an asset into cash. Limited settlement leads involving third parties; this, in return, increases pricing and decreases transaction speed.
- Many innovative solutions are coming up to transform the industry, in that blockchain technology is feeding into this transformation.
- Blockchain Technology is a time-stamped distributed ledger that is immutable and managed by a cluster of computers, not owned by any single entity. Cryptography is secured and bonding the chain of blocks.
- Blockchain allows the democratization of real estate properties and reduces the entry barriers to the average investors. The application of the blockchain real estate sector will be the same way we currently handle the cryptocurrencies. Its value will be secured in a distributed chain of blocks.
Two key benefits of blockchain in real estate sector
- Smart Contracts
- Asset Tokenization
Benefits of Smart Contracts
Smart contracts automate the whole process of data management, due diligence and record-keeping using IFTTT (If This Then That) functionality.
- It will cut-off the middlemen.
- Speed up the real estate transactions.
- All data concerning the property can be saved as a hash file within the blockchain.
- It protects the owners from property frauds. Digital ownership and other information can be stored inside the block, which is hard to tamper with.
Benefits of Asset Tokenization
Tokenization helps in converting assets into digital tokens and this method liquidated the whole asset structure. It opens the asset market to all and gives fractional ownership of assets.
Instead of investing a huge amount in a single property, blockchain offers an opportunity to invest in multiple properties and multiple locations, which includes foreign countries.
If you want to use blockchain-enabled solution to program a smart contract or launch an asset tokenization platform as a business venture, hire a well-recognized company with expert developers, who can help you develop an efficient platform with advanced UI/UX and feature rich sites which can scaled as per your need.
Blockchain Technology has the potential to address various challenges present in the traditional real estate industry with the complete digitized solution to bring transparency and trust in the realty transaction. Though the sector is undergoing a digital transformation, we are still in the initial few steps to reap the benefit out of it.