Blockchain In Real Estate – Exploring Trends & Use Cases

Market Overview of Blockchain Technology In Real Estate

Before moving ahead with the trends and use cases let’s have a look at how blockchain technology is performing in the global market.

Well, according to a study, the global blockchain market in 2022 was around 7.4 billion USD. This value is further expected to increase to 94 billion USD by the end of 2027. This is a huge growth at a CAGR (compound annual growth rate) of around 66.27% (2022-2027).

If we particularly talk about the blockchain in the real estate market, It was valued at 328.3 million USD globally back in 2020. By 2028, it’s expected that the worldwide blockchain market for real estate will be worth  3,884.8 million USD.

Moreover, 86% of industry decision-makers believe blockchain will have a meaningful influence on the commercial real estate space. On top of that, the Asia Pacific area is the one that is anticipated to see profitable growth in the blockchain real estate market. It is because of the growing investments in the real estate sector.

In addition to this, the rental property management application segment is anticipated to grow at the quickest rate, with a CAGR of 59.0% from 2021 to 2028.

So what does it mean?

Well, it means blockchain technology is going to revolutionize the real estate sector at an alarming pace.

Top 7 Blockchain Trends and Use Cases In Real Estate

Needless to say, the real estate sector has long been seen as the foundation of contemporary economies due to its ability to provide individuals and companies with valuable assets and investment opportunities. Nevertheless, despite its significance, the sector confronts several difficulties, such as ineffectiveness, a lack of transparency, and onerous procedures.

Well here comes blockchain technology, a ground-breaking invention that might completely change the real estate industry by solving these problems and improving the way assets are handled, transactions are carried out, and data is saved. If we particularly talk about the real estate sector, blockchain technology has the ability to revolutionize operations by improving security, streamlining transactions, and bringing new levels of transparency.

Let’s understand the same through some of the major applications of Blockchain in real estate.

1Real Estate Tokenization

Blockchain technology has found a significant application in real estate tokenization, revolutionizing the way we transact with certain real estate assets. Through this innovative approach, properties can be issued, purchased, and sold using cryptocurrency on blockchain systems. In this process, tokens serve as representations of a specific number of shares, introducing a seamless and efficient way to engage in real estate investments.

It is important to note that this approach lowers the barrier for regular real estate investors. Additionally, it gets easier to manage commercial real estate investments made abroad. In other words, properties can now be exchanged on exchanges just like stocks.

In general, blockchain’s capacity to boost real estate liquidity has the potential to completely transform the commercial real estate industry. For this reason, it makes perfect sense to tokenize real estate through the use of blockchain technology.

Take a look at Imbrex, for example. It’s an Ethereum-powered blockchain business focused on real estate. Sellers, buyers, and agents can access a large, rotating market of properties for free through it. They even receive rewards by providing the data that powers everything.

For instance, you can invest in any listed property abroad using this platform without having to be physically present there. The good thing is that ordinary investors might soon be able to lay claim to assets they couldn’t otherwise afford, because of the commercial real estate technology companies.

2Asset and Funds Management

Keeping track of everything can be a difficult process, particularly if a real estate investor has a sizable portfolio or there are numerous parties involved in the ownership of an asset.

In addition to keeping an impeccable balance sheet, it’s critical to accurately record every money coming into and going out of the system.

For such specific purposes, a ledger can be created on the blockchain. It is real-time auditable and visible. Additionally, it is unchangeable, meaning that no one entity can alter its specifics at will.

Meanwhile, the same ledger can also incorporate a native digital coin used as a medium of exchange in asset leases and purchases. Additionally, the digital currency can be used to pay utility bills, a task that smart contracts can automate.

It’s true that rent payments and lease agreements can be automated using blockchain-based smart contracts. Furthermore, real-time data from the blockchain can be used to inform important asset management decisions.

3Smart Contracts

Smart contracts are one of the most profitable blockchain technologies, and they are extremely helpful to the banking and finance sectors. With so many transactions to manage, the real estate sector might also gradually benefit from this technology.

With this kind of technology in place, a property transaction between a buyer and seller can now happen online instead of involving almost an infinite amount of paperwork. More security and transparency are available in the transaction than before.

There is very little need for human interaction because all of the transactions are automated. Everything constructed on the blockchain is self-executing once it is put into use. The principals expend less time and effort, and there is no possibility of fraud in addition to lower expenses.

ChromaWay, a blockchain real estate startup that collaborated with Telia, a major Swedish telecom provider, is an example of how this technology is being used. Their objective is to completely digitize real estate mortgages and sales contracts. Blockchain security features can unequivocally authenticate these documents once the necessary technology is in place.

Moreover, real estate businesses can develop smart contracts without any prior knowledge, Well, the credit goes to blockchain technology. Electronic signatures simplify the once complicated and time-consuming process of signing agreements that bind both parties to follow the terms of the contract.

Also Read: A Step-by-Step Business’s Guide to Build Secure Private Blockchain

4Global Asset Distribution

When considering the global context, the previously discussed topics – such as tokenization of real estate, and smart contracts become much more relevant. There are no limits on how blockchain can be used in real estate.

With the aid of technology, a global system for purchasing and selling real estate can be established, complete with instruments that buyers and sellers throughout the globe can easily comprehend. You will be able to automate every sales transaction and instantly verify its legitimacy with smart contracts. In the realm of commercial real estate, smart contracts will allow you to automate every sales transaction and instantly verify its legitimacy.

All transactions on the blockchain are completed almost immediately, even on weekends and outside of regular business hours. Consequently, blockchain technology for real estate offers a global system for property sales and lessens the restrictions brought about by regional variables.

5Loan and Mortgage Securitization

Underwriting and loan origination are still manual processes that depend on paper records. There is room for interpretation when it comes to security architecture, and it takes a lot of work to prevent asset double-pledging. Decisions on trading and asset servicing are frequently based on stale data. Finally, settlement delays resulting from cash reconciliations between lifecycle events can affect investor cash flow.

Blockchain provides banking organizations with safe data exchange, real-time payment settlement, immutable transaction monitoring, and a single version of validated information. A loan or mortgage that has been digitally converted can be programmed to incorporate pertinent information, like ownership rights and loan payment history, to help with servicing choices in the future.

Smart contracts can be used to provide real-time data to authorities as well as to gather and distribute payments to beneficiary holders. This provides investors with evidence of asset performance, resulting in effective lifecycle management and increased confidence in secondary markets.

6Property Development and Construction

Managing larger building projects has become more challenging due to a lack of supply chain transparency, and fragmented subcontracting and procurement methods. By streamlining the procurement process and managing suppliers’ and subcontractors’ reputations, a blockchain platform can reward excellent performance. To improve financial management, smart contracts can automate terms of payment and contract agreements.

By linking products to non-fungible tokens and using them as digital blockchain certificates, blockchain technology can verify the legitimacy of luxury goods at the point of origin.

Finally, by digitizing end-to-end procedures, blockchain can simplify project administration. By doing this, construction managers will be able to avoid bottlenecks and securely monitor and communicate project status with important stakeholders, resulting in more effective project management.

7Land and Property Registries

Property ownership is fundamental to a democratic society. That specifically corresponds to having the capacity to prove and secure it with ease and certainty. Now this can be done through the property registry, also referred to as titling systems.

However, the security of real estate ownership ends at the property registry. The ones in positions of authority have the ability to evict others without them if the system is nonexistent or readily compromised. Furthermore, property ownership can be altered unilaterally and weak land registries can be compromised.

Because of this, investing in real estate can be both hazardous and very appealing. The benefits of cryptography, immutability, and decentralization make it difficult to accomplish arbitrary changes in a land registry on the blockchain. Titles can easily exist on the blockchain in the form of non-fungible tokens (NFTs).

Also Read: Top 10+ Blockchain Trends To Watch Out For In 2024

Top 5 Challenges Of Implementing Blockchain In Real Estate 

The potential advantages of blockchain technology have been investigated by the real estate sector. But a number of things are preventing it from being widely adopted. Among the principal difficulties are:

1Regulatory and Legal Hurdles

Depending on the jurisdiction, real estate transactions must comply with a number of intricate legal and regulatory requirements. Blockchain adoption necessitates legal frameworks that support digital property records and smart contracts as well as regulatory clarity.

2Security Issues

Since sensitive financial and personal information is frequently exchanged during real estate transactions, security is crucial. Because blockchain relies on cryptographic principles to prevent fraud and double-spending, it should theoretically be completely safe.

However, in practice, there are still concerns related to hacking, smart contract weaknesses, and the possibility of fraudulent activity. So these issues need to be resolved to win the confidence of the real estate sector.

3Switching Cost

Making the switch from blockchain-based solutions to paper-based or outdated digital systems can be difficult and expensive. Since property records can span decades, transferring them to a blockchain system is a difficult undertaking.

4Resistance to Change

The real estate sector has a reputation for being conservative and unadaptable. Persuading stakeholders to embrace new technology and procedures can be difficult and time-consuming, particularly for those who stand to gain financially from the current inefficient procedures.

5Lack of Experience

The design, implementation, and maintenance of blockchain technology call for a unique skill set. It can be expensive and challenging to find experts in both blockchain and real estate.

Although cost and complexity are not the only reasons preventing blockchain technology from being used more quickly in the real estate sector, they certainly contribute to its delayed acceptance.

Industry participants need to collaborate in order to adjust to new regulatory frameworks and guarantee the safe and responsible application of blockchain technology if they are to reap its full benefits. Blockchain technology is already being adopted and having an impact in various regions of the world.

How Blocktunix Can Help You With Integrating Blockchain In Real Estate?

As the industry embraces innovation it is essential to incorporate the Blockchain into your current system. You can count on Blocktunix as your reliable blockchain development company. With years of experience providing the greatest Blockchain for real estate transactions that can be more accessible, effective, and safe than ever before, we have earned a solid market reputation as the most dependable company.

Moreover, blockchain transformation takes time, and Blocktunix has a strong track record of assisting companies worldwide in providing premium blockchain solutions. Last but not least, with the assistance of a knowledgeable team, the company’s wide portfolio of clients is effectively enabling them to delve into the realm of safe decentralized apps.