In a world where everything is online, what is the least digital industry you can think of?
Did real estate happen to come to mind?
Throughout history, there has never been any other industry so solidly stuck in the physical world as real estate. From homes that shelter us to hospitals that heal us, from retail stores for shopping to warehouses that store our goods, humans will always need physical spaces in our daily lives.
The term brick and mortar has long stood for companies or industries that require a physical presence and have resisted digitization. And the real estate market is about as brick and mortar as they come — until now.
Tokenizing the physical world
In our brave new world of cryptocurrencies and tokenization, it is now possible to tokenize physical, real-world assets like real estate and digitize them using blockchain technology.
What for centuries has been a historically illiquid and difficult market can now become a rushing river of profit and ease thanks to blockchain — and the implications are staggering.
The ways in which blockchain technology will disrupt and revolutionize real estate are countless, but here are four good reasons why the commercial real estate market should adopt blockchain technology as fast as it can:
1. Transparency
A real estate purchase involves a myriad of financial transactions — where is the money currently, where did it come from, who controls it, who owns it, where is it stored, and when will it get passed off?
These are all questions that must be asked and answered accurately over the course of a property transaction, and you can only imagine the amount of communication and paperwork involved.
But with smart contracts on the blockchain, total transparency can be achieved. All parties involved in a transaction can instantly access financial information or historical data regarding the property, making the process virtually fraud-proof. And with electronic signatures in place, deals can be completed lightning-fast.
Which brings us to our next advantage…
2. Speed of transactions
From the property search process to pre-lease due diligence, blockchain technology can help commercial real estate transactions move at blazing speeds.
Who hasn’t suffered through the hours of searching to try to find the perfect apartment or property? The time-wasting search is over — with a transparent, blockchain-enabled multiple-listing services, lessors, lessees, or brokers can all list their requirements in one place, which enables all parties to quickly and efficiently view listings based on their requirements.
The pre-lease due diligence process remains largely offline due to the continued use of physical documents. Between limited access to these documents and the room for administrative error, this process is bogged down by too much paperwork and too many cooks in the kitchen.
But with blockchain, market participants can create digital identities for their properties. A digital identity would consolidate property information such as vacancy, tenant profile, financial and legal status, and performance metrics. Having this information at the touch of a button will speed up the due diligence process and cut down on clerical errors.
3. Cutting costs
Speaking of cutting, one of the greatest advantages of using blockchain in commercial real estate is cutting costs.
As you can imagine, the previously mentioned paperwork and middlemen can rack up a lot of extra fees in a real estate transaction. From filing fees to professional fees, the more people and paperwork involved, the more expensive a real estate transaction can become.
But smart contracts and digital streamlining will not only simplify and speed up the process of buying real estate, it will also cut out countless extra fees and costs. And because blockchain is decentralized, it may even help cut down on transaction fees.
4. Liquidity
The only thing more sought-after than cutting costs in real estate is greater liquidity.
With extended hold periods, rigidly structured REITs, and the limitations of market hours, real estate has a reputation for being a historically illiquid market — but it doesn’t have to be.
With real estate investment opportunities registered on the blockchain, shares can be more easily exchanged between investors. This would give existing investors more freedom to get out when they need to and give new investors the chance to get in when they want.
The new world of real estate
More transparency, higher speeds, reduced costs, and greater liquidity — who wouldn’t want those things for their real estate investment portfolio?
But the best news yet is that this technological revolution in real estate isn’t just on the horizon — it’s already here.
With investment opportunities like New York City Real Estate Coin (NYCREC), we are placing real estate on the blockchain. By tokenizing real estate, this physical asset suddenly becomes liquid and tradable around the world to anyone who can purchase tokens, almost instantaneously.
Want to be a part of the new world of real estate? Join the NYCREC Telegram group to be a part of our active and helpful 24/7 community.
