One of the best investments available today is real estate. The benefits of blockchain in real estate are gradually being recognised by business organisations and industry experts.
According to the report, the well-known cryptocurrencies' underlying technology has the potential to drastically change the real estate sector as a whole. According to an MSCI estimate, the size of the professionally managed global real estate investment market increased from $7.4 trillion in 2016 to $8.5 trillion in 2017.
The real estate market of today, however, is made up of several segmented, autonomous networks that are opaque and have transactional friction. Business owners should be aware of the many advantages of blockchain in real estate before incorporating the technology into their operations.
Explicit Blockchain Effects on Real Estate
Despite being the most popular technology available today, many business owners lack trust in blockchain. They continue to question if blockchain in real estate is profitable or not. Therefore, we have evidence supporting the advantages of blockchain in commercial real estate.
In 2021, companies across a range of sectors invested almost $6.6 billion to implement blockchain technology. The profit is 50% higher than it will be in 2020.
According to blockchain specialists, real estate blockchain spending will increase by an average of 48% globally.
According to Statista forecasts, investment on blockchain solutions will increase globally, rising from $4.5 billion in 2020 to $1.9 billion by 2024.
These statistical market data illustrate how the demand for blockchain in real estate is constantly rising. Now that we are familiar with the significance of blockchain in the modern era, let's discuss the difficulties the real estate sector has and how blockchain is helping to resolve them while providing enormous advantages for Blockchain Real Estate Software Development.
The Real Estate Sector Faces These 5 Challenges
Every now and again, new obstacles are brought on by the ongoing changes in the real estate market and the economy. Real estate professionals face a variety of difficulties because of the various aspects that affect the industry's revenue, as will be detailed below. Finally, they look up the price of hiring a blockchain developer because firms need expert help.
In the traditional real estate market, there is a significant amount of time-consuming documentation associated with every transaction. Because of this, real estate companies regularly lose money and potential customers while also getting distracted from their main goal. Blockchain technology turned out to be an asset in solving this issue.
Businesses can say goodbye to the laborious paperwork and embrace a contemporary method of keeping the papers ingeniously and securely by integrating blockchain in real estate.
Lack of Clarity
Due to the inclusion of numerous elements including the need for funds, credit score, citizenship, and credentials, real estate is not for everyone. Additionally, there is no supplementary database where the data needed to decide whether to buy or sell something can be accessed. Traditional approaches don't preserve work transparency, which has an impact on corporate choices.
But since the adoption of blockchain in real estate, this issue has been significantly overcome. Businesses can now benefit from an open working environment while utilising cutting-edge technology.
We are all aware that there are numerous intermediates in the real estate industry because business owners deal with numerous issues every day. This has a further negative impact on the business process. For instance, when two parties are active in the real estate industry, they must find a way to work with a third party to complete the task. The situation with blockchain, however, is different.
When integrating blockchain with real estate, intermediaries are not used. One of the most significant problems that many realtors encountered before the creation of blockchain development has been significantly overcome thanks to technological growth.
Reduced Transaction Speed
There is no denying that the presence of numerous intermediaries slows down transaction speed in the real estate industry. According to the poll, almost 44% of travellers schedule a meeting with real estate brokers before departing for a foreign country. It slowed down the real estate transaction procedure, which also significantly decreased the transaction rate.
Therefore, if blockchain technology is introduced to the real estate industry there, transaction speeds will increase by two times.
High Project Investment Costs
Finally, we will address the relators' most pressing problem—their budget. An offline business procedure is more expensive since it involves more middlemen, such as broker fees, attorney costs, exchange fees, etc.
Therefore, moving to technology as soon as possible is advised if you want to prevent such unnecessary costs, as the cost of developing a blockchain is lower than that of other technologies.
These are some of the main obstacles to blockchain in real estate that business experts have previously had to overcome. Now that you are aware of the issues and how rapidly blockchain has solved them, you should integrate it into your real estate firm. The advantages of blockchain in real estate have also been covered below.
What Are Blockchain's Main Advantages for Real Estate?
On a single platform, real estate platforms link buyers and sellers. As a result, there are increased opportunities for real estate fraud and scams because the process involves so many physical interactions, transactions, and other activities. Even the 2008 report on the financial crisis notes that the inflated real estate sector has disastrous results.
Blockchain serves as a saviour to solve such serious issues. Long-term benefits include helping the real estate industry prevent fraud and threats. Let's now explore some of the incredible advantages of blockchain in real estate.
In the commercial real estate process, real estate assets are transformed into digital tokens that are then sold on platforms for smart contracts. A smart contract stores information about a property in the form of digital tokens. After the conditions are satisfied, the property is transferred.
When real estate is tokenized, the barest minimum of human interaction takes place. To protect the system against fraud, the process calls for the creation of ICO tokens or NFT tokens. Real estate tokenization can be helpful because it allows multiple investors to engage in a single property due to fractional ownership. Another advantage of tokenized real estate is lower transaction costs, which are made possible by smart contracts.
Greater Data Transparency & Accessibility
Scams in real estate are caused by a lack of data availability and complete lack of job openness. The banking industry failed to survive the effects of the inflated valuation during the 2008 financial crisis, illustrating the detrimental effects of this situation.
Decentralized blockchain networks assisted in enabling work openness and data accessibility in the real estate sector to address this significant issue.
Businesses may tackle these issues and take advantage of the enormous advantages of blockchain in real estate by using decentralised app development services. Investor trust is increased by the technology and high-level work openness made possible. Real estate investments made using blockchain technology are significantly safer than traditional ones.
There Are No Middlemen
Businesses can create agreements using smart contracts with only a few lines of code, speeding up the procedure. The real estate industry employs numerous middlemen, including attorneys, financial institutions, advisers, realtors, and others, which slows down the process flow from buyers to sellers.
Businesses can eliminate intermediaries and streamline the process after adopting blockchain in real estate. The cost of developing a blockchain-based real estate website is also less than that of other development kinds. Blockchain technology accelerates and streamlines the process since there won't be any middlemen.
Reduced Costs & Business Risks
One of the most important advantages of the blockchain is the reduced risk to potential investors. Investors are able to buy and sell investment tokens in real-time as the value of the property is liquidated. A blockchain-based smart contract solution decreases the risk of tampering and data manipulation for the benefit of all parties.
There will be less blockchain development expense and less risk as blockchain-based real estate transactions are safe and compliant with global real estate regulations. On the other side, as they lower the costs related to managing real estate investment prospects, buyers and sellers also receive a better return on their real estate investment.
Another significant advantage that blockchain offers to all companies is security. Business owners must maintain tighter security due to the sensitive data exchanged in the real estate industry, which is made possible by incorporating blockchain technology. It is intended to maintain system security while shielding enterprises from online assaults.
Businesses can be confident of safety and security since all the data and sensitive information is kept in blocks and connected to a distributed ledger. The main justification for why companies like blockchain mobile app development for any kind of business solution is this.
The real estate market is seen to be illiquid because there aren't always buyers or sellers available. Instead of selling equity to a bank, a specific portion of your home's equity may be released as tokens and offered for sale on a market to investors.
Additionally, bitcoin and blockchain liquidity offers pricing stability and reduced volatility, which benefits owners of real estate businesses. Therefore, companies who choose to develop blockchain technology can position themselves to reap rewards for many years to come.
For real estate owners and investors, real estate tokenization lowers entry barriers while allowing access to the capital. The use of ICO tokens has simplified the process of making a significant investment. Due to the creation of ERC20 tokens or ICOs, buyers can now participate in fractional ownership.
For instance, five tokens represent the equitable interest in an apartment building; buying one of them would convey ownership of the entire asset. According to the business creating the real estate app, if a customer just bought two tokens, they would only have a two-fifths equity stake in the asset.
One of the finest ways for investors to invest in real estate is using blockchain technology. The moment is ideal to incorporate blockchain in real estate as technology develops in the Metaverse, bitcoin, blockchain, and other areas.
The Last Wise Words
As this blog has clearly demonstrated, blockchain offers several business options to increase the trust and effectiveness of the real estate market. We might therefore conclude that it will be interesting to see how events develop in the future. While the majority of firms have already adopted blockchain in the real estate industry, you may join the competition by staying one step ahead of the pack.
Hire a blockchain developer or speak with a reputable blockchain app development business to assist you in properly integrating the newest tools and technologies.