Blockchain Technology is Coming: Is the World of Real Estate Ready?
As cryptocurrency speculators have ridden the Bitcoin wave up (and down) over the past year, a different group of global professionals has come to realize the potential benefits of this technology: real estate investors, developers, operators, and service providers. Their shared cautious optimism has very little to do with the rise or fall of cryptocurrency prices, but instead comes from the promise of the underlying technology that fuels Bitcoin and its offspring: the Blockchain.
A Blockchain is a type of distributed ledger. This means that every participant has his or her own copy of the ledger and there is no central record of account. Once recorded, ledger transactions cannot be altered and every copy of the ledger is identical across the network. The network and all constituent parts act as a database that records transactions – generating an immutable audit trail for transactional activity. The network can be either completely open or open only to trusted counter parties.
What benefits could Blockchain provide to players in the Real Estate industry? Here are three areas that suffer from efficiency problems where Blockchain technology could be an effective solution:
Real Estate Documentation
Currently, the majority of real estate documentation required and used for transactions (deeds, rental agreements, titles, mortgage documents, etc.) is in paper form and come from various third parties, opening these transactions to the risk of potential forgery and providing opportunities for fraud. System efficiency is low, manual errors happen often, and record keeping is open to theft and human error.
A Blockchain land registry platform would eliminate multiple third party intrusions and mitigate fraud by streamlining participation and authenticating data/documents. The Swedish National Land Survey has created a proof-of-concept to investigate how Blockchain technology may reduce the manual errors while transferring documents.
Leasing and Technology
In owning and managing a commercial or residential property there are a multitude of service and payment transactions that must occur between the lessor, lessee, and other third parties. Cash flow, appreciation, and tax information must be tracked, recorded, and verified, and compliance maintained. Therefore, managing properties and tenants, and enforcing the agreements around lease terms requires a better platform for consensus and reference as well as payments.
Smart contracts on Blockchain can structure secure cash flows and automate payments with real-time reconciliation. Smart contracts can also enable split ownership and distributed rents. The City of Rotterdam has teamed with Deloitte to achieve data driven city management, beginning with a prototype for recording lease contracts on the Blockchain utilizing smart contracts.
Property research requires a significant amount of time where financials and legal regulations are concerned. A large part of this effort is finding and verifying physical proofs of identity, ownership, etc. Since this is a manual task, the process is time consuming and human error and data loss easily occur. Searching for properties, vetting, and entering into terms of sale is an extensive and unnecessarily complicated effort that can discourage investment.
An MLS built on a Blockchain would enable more accessible and comprehensive listings with better data control and verified historic records through a peer-to-peer network. In addition, by building unique digital identities for each property on a Blockchain, key information such as financials, owner history, vacancies, etc. would be readily accessible on demand. ABN Amro has begun a pilot with IBM to develop a system in which buyers, sellers, brokers, and regulators may share and record real estate transactions while supporting connectivity with regulatory bodies such as the central bank and Land Registry Office.
Although still in the early stages of development and testing, Blockchain technology progress is gaining steam, and real estate professionals will be rewarded for getting on board sooner rather than later.
What should you look for at your company to evaluate if implementing a Blockchain is the right solution?
Shared Data: Blockchain is a technology for shared databases – there is a need for a structured repository of information.
Opportunity for Disintermediation: Blockchain removes the need for trusted intermediaries – no gatekeeper is required to verify transactions and authenticate the source.
Multiple Writers: Blockchain is a technology for databases with multiple writers – multiple entities generating transactions that modify the database.
Absence of Trust: Blockchain is a technology for multiple non-trusting writers – there needs to be a level of mistrust between the entities writing to the database.
Transaction Dependency: Blockchain provides value when there is interaction between the transactions created by the writers, meaning the transactions depend on one another.
Emerging technologies that impacts commercial and corporate real estate such as Blockchain, Immersive/AR, AI, Autonomous Vehicles, Robots and Drones are topics that will be discussed at Realcomm | IBcon 2018, which will be held on June 6-7 (Precon: June 5) at The Cosmopolitan of Las Vegas. For more information, visit Program Details: Realcomm | IBcon
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This year’s Business Solutions & Intelligent Building Expo will feature 140+ real estate technology companies showcasing the latest industry-specific solutions and services. It will be two days of continuous product demonstrations and networking. If you have even one technology decision to make this year, don’t miss this opportunity to find the latest best-of-breed solutions – under one roof! Click here for a list of Realcomm | IBcon 2018 Solution Providers
UPCOMING REALCOMM WEBINARS
Achieving Optimum Energy Efficiency in Buildings - New Benchmarks Being Set - 7/26/2018
Five years ago, the driving factor for smart buildings was energy costs. While operational efficiency and occupant experience have been added to the discussion, energy savings still play an important role in the smart building strategy. Energy usage in buildings accounts for over 40% of electrical consumption which has ties to coal, natural gas, petroleum and nuclear energy. Energy waste in buildings is easily evident and provides great opportunities when addressed. Advanced energy analytics, enhanced building automation monitoring, new lighting solutions, low voltage infrastructure, micro grids and other technologies are reshaping the building energy landscape. This webinar will bring best practices and new benchmarks into focus.
Tom Shircliff is a co-founder and principal of Intelligent Buildings, a nationally recognized smart real estate professional services company that was started in 2004. Intelligent Buildings provides planning and implementation of next generation strategy for new buildings, existing portfolios and urban communities. Tom is a speaker and collaborator with numerous universities and national laboratories, a gubernatorial appointee for energy strategy and policy and founding Chairman of Envision Charlotte, a Clinton Global Initiative.
Kevin Bates is the owner of Sharp Development company. Over the past six years, he has concentrated on retrofitting older generation concrete tilt-up buildings that are carbon neutral, have a net zero energy bill as well as a strong emphasis on the health and wellness of the interior environment for the occupants. The driver for Kevin is to demonstrate that this way of repurposing existing building stock can be done in a manner that is more profitable for the ownership than the less expensive way of building to meet minimum code.
Dana bridges the gap between buildings and their occupants through fun initiatives that drive energy efficiency across LinkedIn’s global portfolio. With over six years of experience in corporate sustainability at both startups and large corporations, Dana understands the crucial role that business plays in addressing climate change. She is excited about how technology is transforming the built environment, and looks for opportunities to scale innovation and to help LinkedIn and others achieve audacious sustainability goals.
Matt Eggers is currently VP, Yardi Energy where he leads the development of software for energy management and high performing buildings at Yardi. He has extensive experience in leading teams to record sales and growing operations and market share.
With over 30 years of experience in commercial real estate and IT/Internet-based building services, Chris leverages his deep rooted knowledge of what is important to building owners and operators. He will discuss how ICONICS advanced building optimization software solutions with real-time Fault Detection and Diagnostics (FDD) help customers by integrating information from all disparate building equipment systems and energy metering into a uniform building automation system. Automated FDD visualizes in a meaningful manner what is critical to achieving energy reduction, operational efficiency and sustainability goals. Chris holds a BA from the University of Pennsylvania.
Ralf VonSosen has 20 years experience in technology product, marketing and customer operations. He is passionate about transforming data into actionable insights. Ralf leads Lucid's customer onboarding and professional services.
Karthik is the Director of Energy Management Solutions at EnerNOC. His team works with large energy users in the Commercial and Industrial sectors to deliver outcomes using energy intelligence software, utility bill management, smart building solutions, microgrids, and more. Karthik has over 10 years of experience in the energy industry and holds a Bachelors in Engineering Physics from Queen’s University and a Masters in Systems Engineering from Cornell University.