Blockchain technology: While the hotness of cryptocurrency has surged in the last few years, the core concept behind it, ‘Blockchain’, can be used in a variety of fields. It can also be used in the real estate industries, to the benefit of consumers and the industry, to fortify data privacy, ameliorate security, boost paperless transaction, etc. Blockchain, which was popularised by the Bitcoin cryptocurrency, uses concepts such as artificial intelligence and internet of things, to make the operation run by group actions of databases in real time.
“In the blockchain technology, the data does not sit in one focused location and hence, it will not be prostrate to virus attacks or localised affliction. The primary benefit of blockchain is that it is a straightforward link, from business to service and vice-versa, without any intermediaries. This helps to save expenditure, time and clutter,” says Rajiv Nehru, head of training and product development, RICS South Asia, adding that blockchain can make the real estate industry a high-octane.
Benefits offered by blockchain technology
Blockchain technology can be utile, when there is a lot of dependency on empirical data and where ‘guess’ is part of the business. Blockchain can also be decisive, where little-known data can result in suspicion and agony to the end-user. Such instances seem common in the realty sector, where transparency is at a premium and information is distributed, hidden or ambiguous. “The realty sector is infested with high cost of transaction,unforeseeable timelines, opaque payable diligence, illiquid industry, cash stream management issues in case of leasing and lack of transparency. Blockchain allows for excavation, increased transparency and maintains the complete chain of records, which enables faster due diligence,” explains Vikram Pandya, director – fintech, SP Jain School of Global Management.
Is the real estate industry ready for blockchain execution?
According to skilled, blockchain technology can finds application in the real estate sector, over the entire life-cycle, from pre-feasibility to execution and maintenance of projects. Many processes within the real estate development life-cycle, like product specifications, costs, contracting, procurance, property enrollment information and due diligence, project development, sourcing, customer identification, product designing, customer taste, etc., can be processed through the blockchain technology, to bring out down-to-earth data that can then be used as business intelligence, to drive sustainable operations.
- One of the key areas where regulations are lacking, is pertinency of ‘smart contracts’. Smart contracts make it possible to use programmable logic. For instance, a typical lease agreement will require identity of both the parties and will provide for payment terms. A smart lease contract, in this case, can verify the parties by using digital signatures and can automatically transfer amounts, based on a plan.
- Presently, the Information Technology Act does not provide clearness, on whether blockchain-based digital signatures are legal or not.
- There is no lucidity under the Indian Contract Act, vis-à-vis such digital contracts.
- There are many related acts and provisions, which will need updates, to reflect the impact of these modern-day technologies.
- Transparency and regulatory management will also be needed for blockchain-based REITs (real estate investment trusts).”
Advantages of using the blockchain technology in the real estate industry