Real estate transparency leads to better cities — here’s how blockchain helps
One of the challenges the real estate industry has long faced is a lack of transparency. Information tends to be heavily siloed and the data that is available is often fragmented. This creates inefficiencies throughout real estate transactions that can lead to longer sales cycles, mispricing, and higher fees.
While increased transparency improves efficiencies for real estate investors, owners, and sponsors, the implications can go far beyond that. Governments and public officials are increasingly aware of the impact real estate plays on a city’s development and economic success. The real estate sector helps drive investment and new businesses into cities, revitalizes local communities, and provides an attractive space for residents to live and work.
Real estate market transparency is the foundation that is required for this growth. Businesses and investors need comprehensive information about regulatory frameworks, property market data, sustainability practices, and pricing models in order to make informed decisions. Such levels of transparency can ensure standardized, clear, and fair practices for all parties involved.
In JLL and LaSalle’s Global Real Estate Transparency Index 2018 report, the firms measure and rank the transparency of real estate markets in 158 cities across 100 countries. The index reveals that ‘Highly Transparent’ cities account for 75% of all global commercial real estate investment.
As expectations for higher standards and greater transparency rise, we see blockchain technology poised to have a tremendous impact on the real estate industry going forward.
The ability to have aggregated, verifiable information would allow investors to easily see the title history, insurance claims, financial information, and debt associated with the property. Purchase agreements, brokerage agreements, rental contracts, environmental reports, and other documents could be securely signed and stored in an accessible environment without concern for fraud. This would massively decrease the scope and friction of due diligence and provide much greater transparency to the investment process.
Blockchain also enables countries to develop a real-time database of the use and ownership of buildings. For example, the government of Kenya aims to build 500,000 units of affordable housing and is using blockchain technology to ensure the proper distribution to deserving participants. Other countries such as Ghana and Georgia are also conducting similar trials. These initiatives from developing countries play a leading role for cities in emerging economies to compete on a global scale. In the far future, blockchain could lead to a global standardization of real estate, encompassing facets from city planning to environmental reporting to cross-border transactions.
At Meridio we’re working hard to help advance real estate transparency and make this a reality. We began with our work in Dubai building a land titling solution for the Dubai Land Department. We continued with our goal of fractionalizing real estate by tokenizing one of the world’s first assets and putting information on-chain. Finally, our efforts expanded to blockchain based leasing with our launch of reLease. We’re excited to share our learnings as we continue to bring blockchain to the real estate industry, and real estate onto the blockchain.
