Role of Blockchain in real estate transparency – A take from Land Sterling
Of all the disruptive and innovative technologies being discussed these days, one, in particular, continues to attract a great deal of buzz: blockchain. Many industry experts argue that the blockchain can completely transform the way we conduct day to day business that includes paying for goods and services or exchanging information. Like any other industry, blockhain has game-changing implications for real estate.
In principle, the blockchain lets a continuously updated database to be distributed across a network of computers. The nature of the distribution makes sure that there is no discrepancy in the data by removing the need for intermediaries and making the information very secure. The end result is bringing a new level of transparency to financial transactions.
When it comes to the real estate industry, the blockchain can enable countries around the globe to develop a detailed real-time database of the use and ownership of buildings. Countries such as Sweden, Ghana, and Georgia are already conducting trials. This could be transformational because transparency in real estate markets has a profound impact on both economic development and the quality of life of citizens. Transparency also provides increased protection for individuals’ property ownership rights.
Transparency can drive investment
On a broader international scale, there is a critical link between transparency and a certain territory’s real estate market to foreign investment. A recently published Global Real Estate Transparency index by a leading research company tracking transparency in real estate market, surprisingly the top 10 most transparent markets attracted 75% of global investment in the commercial real estate.
The most transparent market has been the Asia Pacific. Japan, for example, has moved from having semi-transparent to the transparent real estate sector.
The real estate industry is making great efforts to track the markets of cities like Shanghai and Beijing. As investment grows in Asian property, so does transparency.
Growing global demand for transparency
The astonishing revelations of the Panama Papers in early 2016 have led to an increased demand for real estate transparency. Organizations like Transparency International are placing real estate industry transparency under great scrutiny and the fight against corruption has become part of international political agenda.
Various initiatives are being taken at Government level in Asian and other countries. These initiatives have also played a leading role in greater transparency coming to property markets of China and Japan. In particular, they have also served to highlight and then close gaps between regulations and their enforcement.
As property index shows, transparency is increasing in real estate markets even while the possibilities of the blockchain are being fully worked out.
These changes are facilitating new investment and business activity but also, significantly, improving community well-being and advancing inclusiveness.
It’s clear that technology will continue to be a key factor in driving transparency across many industries and for the real estate sector that is something to be embraced.
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