Real estate businesses and professionals that fail to adapt to the adoption of blockchain technology in the sector will struggle to survive, a panel of experts working with the technology said at the MIPIM real estate conference in London.
Blockchain technology offers a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network.
Speaking at the event, the panel set out the various benefits that blockchain technology will bring to the real estate sector and investors in it. Among those mentioned were cost-savings, greater efficiency and transparency.
But the technology also poses existential threats to a host of roles and positions in the sector, they said. "Everyone [in the real sector] is vulnerable," said Karl Smith, CEO of technology consultancy Paradigm Interactions Inc., specifically pointing toward intermediaries between investors and property developers or owners. Blockchain technology will allow investors more direct access to information about an asset and an opportunity to invest in it without intermediaries facilitating the transaction, he said.
"It will disrupt those relationships that already exist that enable assurances and trust because investors will want to reduce the costs from those relationships," said Smith.
Blockchain technology was first developed in 2008 as the basis for cryptocurrency bitcoin. A number of other use cases for the technology have since been proposed, including in real estate.
"For me, the real transformation [for the real estate sector] is around cost-savings, efficiency, transparency, the ability to fractionalize the assets [or split ownership of an asset among a large number of investors] and the ability to therefore bring more capital to the asset class in a much more efficient way," said David-Alexandre Dahan, chief investment officer, real estate, at Leaseum Partners.
Practical examples of blockchain's use in the real estate sector are as yet limited, the panel admitted. However, Jonny Fry, CEO of Teamblockchain Ltd., highlighted a $30 million condominium project in Manhattan, N.Y., and a $600 million project in the U.K. that are being financed using the system. The regulation and availability of exchanges on which investors can access blockchain investment opportunities are holding back its progress, Fry added.
Still, the widespread adoption of blockchain technology in real estate is inevitable, the panel said. Paradigm's Smith, who advises the U.K. government on a range of technological issues, said blockchain technology would allow the U.K. to produce a "new Domesday Book," referring to the manuscript record of land and assets across much of England and parts of Wales completed in 1086 by order of King William the Conqueror.
The U.K.'s Land Registry announced Oct. 1 that it was exploring how blockchain technology could be used to "revolutionize the land registration and property buy-sell process."
"[Blockchain technology] is coming," said Gonzalo Sanchez Slik, head of investor relations and business development at Brickblock Ltd. "You have to start now. The last thing anyone wants in a competitive space is to be second place by a long, long way."