A Dynamic Solution To The Industry’s Many Frustrating Problems
In this fourth installment of the Beyond Bitcoin series, we continue to work through a list of problems faced by large-scale enterprises in different facets of the global economy.
Part I introduces exogenous and endogenous assets on the blockchain (if you’re not sure what those words mean, we recommend reading the first article before continuing). Part II covers blockchain use cases in commodities and international trade, while Part III covers blockchain in agriculture.
The following (Part IV) focuses on how blockchain solutions are benefiting the real estate sector. The results are not immediately visible to end-users, investors, or Main Street consumers. However, large and small companies extract noticeable value from distributed ledger technologies (DLTs) today.
Real estate and land ownership can appear misleadingly straightforward but contain many nuanced complexities.
These complexities result in siloed information that drives up settlement costs and times, increases the number of intermediaries, and creates unnecessary estrangement between prospective buyers and sellers.
The issues with existing real-estate markets are diverse. Investors often find themselves barred from investing in alternatives due to high barriers of entry. Unclear communication channels can make it difficult for renters to find affordable listings or input maintenance requests to property owners.
Property owners are often unable to access capital markets by leveraging their owned assets due to prohibitive financing conditions and lack of opportunity to offer fractional shares. These issues culminate in siloed data that increases costs at every level of the real estate market.
As diverse as the problems associated with real estate may be, various exogenous distributed ledger applications have eased many of these issues. They’re certainly not universal cures, but DLTs and blockchain have given rise to many companies that are solving various matters associated with real estate and land ownership.
For institutional investors and high net worth clients, a high barrier to entry currently plagues the alternatives market. US-based company Harbor leverages blockchain technology to mitigate these increased costs of access to this often lucrative market by homogenizing the issuer’s and broker-dealer’s available data.
The Real Blocks platform enables investors to access global capital flows using intermediary channels in a regulatory-sound environment. This globalized connection is possible as Real Blocks facilitates both investment and distribution for its clients.
Cprop mediates a wide range of real estate transactions using its blockchain platform. Their services range from property construction and loan underwriting to investment management for clients seeking alternative investment opportunities. These companies empower institutions and high net worth clients with unfettered access to the alternatives market by utilizing distributed ledger architecture.
The broad subject of data mediation in real estate is approached in various ways by several different blockchain-based companies offering software-as-a-service (SaaS).
Bold and broad in scope, Ubiquity provides a service that presents its clients with a clear ownership record. Their services expedite real estate transactions and positively impact costs associated with real estate dealings.
Blockchain-based intermediation is beginning to have material effects on the real estate market. Elea, a Swiss blockchain SaaS company, offers savings up to 20% by benchmarking properties against similar real estate assets.
Tokenization of assets enables diminished costs for real estate transactions. Blockchain company Block Square represents property assets on their distributed ledger using tokens. The service allows brokers, agents, and consumers to transact seamlessly with one another globally.
On a consumer level, difficulties in the existing real estate market persist, but blockchains are emerging as promising solutions. Digital mediums are improving the cost of real estate transactions regardless of the price of the property.
Communication between agents, brokers, title companies, lawyers, and clients can often become a telephone game, with costs increasing with every call. Propy seeks to automate the closing process for all participants, allowing everyone to do more while making more, all while driving down the cost for the client.
Interfacing with existing property markets, RentBerry enables users to rent and buy properties using their blockchain-powered real estate map. OpenBrix focuses solely on rental properties using its platform. This blockchain-based company uses its distributed architecture to drive down costs using a competitive bidding format that is actively monitored by real estate agents.
These companies permit consumers at every price point to engage in an elevated user experience arising from trustless shared information using blockchain.
Both consumers and institutions benefit from access to a diversified portfolio. One novel implementation of blockchain is allowing users to purchase fractional ownership in real estate. Several companies are using this blockchain style to afford both levels of clients greater diversification of investment assets.
Realty Bits allows users to list their property on its Stellar Lumens powered blockchain platform and offers co-investment opportunities for prospective buyers.
BitOfProperty is an Estonia-based company that enables users to purchase fractional ownership shares in rental properties across Europe while receiving dividends from the tenants’ monthly rent payments.
Meridio is engaging in similar activities in the United States, granting users the ability to purchase a stake in real estate without acquiring the entire property or facilitating the asset’s maintenance.
The intersection of fractional real estate assets and tokenization comes to fruition on the UVAS platform. This company allows individuals and businesses to gain exposure to a large variety of alternative co-investment opportunities such as private equity, debt, and real estate.
In addition to these attractive value propositions by innovative companies, many additional applications are in development using blockchain to assist real estate and property management industries.
ManageGo is an all-in-one blockchain tool for property managers that unifies the often disconnected steps of providing a differentiated customer experience. Property owners can accept rent payments from their tenants on the platform and allow renters to submit maintenance requests.
All properties begin at the planning and construction phase. The Briq platform provides construction financial forecasting through data visualization and tracking on its platform with applications for general contractors and construction managers.
A lack of trust between parties, which results in longer intermediation times, is one of the most acute issues arising from siloed data. The trustless aspects of blockchain technology assist Escrow Commons with the immediate release of funds to fulfill set preconditions between counterparties. Built on the Ethereum blockchain, these escrow contracts are auditable, secure, and automatic.
The real estate industry is overdue for improvements in many respects. We have explored several diverse companies that have identified and mitigated pain points for investors, owners, and renters in global real estate markets using blockchain.
Bridging the currently siloed data in real estate and property markets using blockchain is turning the vision of a unified, global alternatives market into material reality.
We will examine how biomedical companies and healthcare initiatives worldwide are experiencing positive results by utilizing exogenous distributed ledger applications in our next installment.