Over the last few years, the word blockchain has been circulating on the internet. Yet many people find it confusing because of how it’s revolutionizing all industries, including real estate. Blockchain is an open-source ledger technology whose objective is to create total transparency in an economic system.
This technology has a major implication in the world of real estate. For centuries this sector has been rampant with all manner of fraud. Thus the emergence of real estate transactions that are backed by blockchain is an innovative necessity.
But the real estate industry leverages emerging technology at a lower rate than other sectors. That is why the internet revolution didn’t change much in real estate.
In this article, we will consider the place of blockchain in real estate.
How Blockchain Concepts Influence Real Estate Industry
Not all concepts related to blockchain will affect the real estate industry. But a few like metaverse, smart contracts, tokenization, decentralization and more can have a significant role in this industry.
Metaverse refers to virtual reality and augmented reality built on the blockchain and the concept facilities activities such as interior décor, property tours, etc. These are executed immediately over necessary channels because of smart contracts.
By combining various functionalities, metaverse provides an exceptional ultimate viewing experience. Surprisingly virtual real estate has become popular among individuals without adequate knowledge of the new economy. Investors can use virtual real estate to own a piece of digital land as well as sell it at will.
Metaverse has greatly affected the viewing experience, but there is a lot that has to be done to bridge the gap between metaverse real estate and physical real estate. An excellent example is Decentraland which is the virtual destination for digital assets.
Smart contract programs are developed and maintained on this technology to solve complex processes. They facilitate the seamless connection between real estate players such as buyers and sellers. The strengths of these digitized contracts are pegged on their self-executing abilities because there is no intervention from third parties. Although they’re similar to paper contracts, the digital format allows buyers and sellers to secure their information, thus preventing any modification.
Entities tokenization in real estate will enable fractional ownership. Some people are discouraged from investing in real estate because they don’t have enough money, but they can now jump into this industry with tokenization. Because of that, premised activities for leasing and maintenance stem from collective decisions. Even so, fractional owners can’t use their property to access loans.
Decentralization is the most popular concept in blockchain technology. The technology is designed to eliminate central authorities such as banks.
Apart from buyers and sellers, the real estate industry has other players like brokers, lawyers, banks, etc. The role and participation of these intermediaries will be eliminated when the use of this technology goes mainstream. As a result, buyers and sellers will get the real value for their transactions due to direct interactions.
Additionally, the decentralization of blockchain accounts provides security. Therefore the quality of service in the real estate industry is set to improve when blockchain becomes deeply rooted as well as data transparency and immutability.
How Blockchain Technology is Being Used Today
Apart from accepting Bitcoin as a mode of payment when buying a property, real estate players are already using the blockchain in various ways. These include:
Asset Management and Real Estate Funds: Through tokenization, many people can now join real estate by investing in alternative assets, digital securities, and financial instruments. Developers program digital assets, including transaction history, ownership rights, and other regulations.
Property Management: Data sharing of blockchain makes property management effective. It streamlines rental collections and provides due diligence across portfolios. These improve and make operational efficiency sustainable.
Urban Planning: Property development is neglected many times during community planning. But a lot can be simplified when deployed on the blockchain, including infrastructure features, urban community master plans, feedback loops, educational resources, and many token-powered incentives.
Even personal project owners can integrate the community’s plans into them, thus improving perception, property value, and sustainability.