Blockchain is one of the most transformative technologies available in many commercial real estate industries. With the technology developing at a rapid pace, real estate investors are facing challenges on how far they should invest. However, adopting Blockchain-based smart contracts will generate value and improve efficiency.
Commercial real estate investors are finding that Blockchain-based smart contracts will play a major role in the industry. Blockchain technology can transform commercial real estates operations such as purchasing, sales, financing, leasing, and management transactions.
Commercial Realestate Blockchain
Blockchain is a network of distributed databases where every transaction is recorded in the form of a group of blocks. These blocks are stacked together to form a chain of blocks. Storing a real estate document in a Blockchain will ensure originality and credibility. Also, any approvals and confirmation can happen easily on the Blockchain network and can also be stored for future references.
Prominent features of Blockchain which will be helpful in commercial real estate:
- Smart contracts to streamline lease payouts:
Smart contracts are a set of predefined rules that can’t be edited. Every transaction is time-stamped and recorded so, therefore, there is no need to keep a track of everything. Hence the whole process gets automated and saves money and time.
- Tokenization that enables smooth land registry process:
A token is a smart contract on the Blockchain, which is used as a digital representation of a physical asset. An asset for real estate is the property and can be tokenized. When a token that represents the asset is created on a Blockchain it has a unique identity and cannot be traded for another token. The person who owns this digital token is considered to be the owner of the property. Therefore it makes it easier to identify the owner of the property. The token can also be easily traded which is beneficial in buying/selling the property.
Blockchain commercial real estate process:
- Property marketplace:
The lessor and lessee meet at the online marketplace where the verified information about the property is available with transparency. This includes the owners’ details, geographic location, the area covered, and more. The market place is integrated with government systems to ensure the authenticity of the information.
- Identity verification:
A separate Blockchain identity verification solution is integrated with the marketplace. It may involve third-party verification companies, government agencies, banks, investors, and more who will verify the identity.
- Immutable agreements:
Once both parties agree and enter into an agreement, the terms and conditions of the agreement will be recorded in the smart contract.
- Autonomous payouts:
As per the terms and conditions on the smart contract, the lease payout will get credited in the account of the lessor. Also, the data will be recorded on the Blockchain with the time stamp and can be used for real-time data analysis.
Benefits of utilizing Blockchain on commercial real estate:
- Enhanced accessibility to property data:
A Blockchain marketplace allows users to have more control over their data. Here the broker or the agent won’t be able to manipulate the data. This will reduce expenses and enhance transparency.
- Reduction in the number of intermediaries:
With the Blockchain solution, the buyer and seller will be able to communicate directly, eliminating the role of intermediaries.
- Quicker background checks:
The Blockchain solution will verify the information easily without any hassle and make it much faster than the traditional method
- Hassle-free cash flow management:
Blockchain-based smart contracts automate all the processes that involve multiple stakeholders who will coordinate with each other and distribute lease payouts and pay maintenance charges
Blockchain implementation for commercial real estate is crucial for it involves high net transactions. The commercial real estate industry is capital intensive and a technology solution like Blockchain will reduce the operation cost and make quick transactions with effective and smart contracts. Blockchain is the next step in the evolution of technology for commercial real estate.