Blockchain is perhaps best known as the underlying technology for cryptocurrencies including Bitcoin but many industries are weighing its benefits.
While cryptocurrency values remain volatile and may be subject to increased regulation, it is ironically blockchain’s stability that is attractive to sectors where reliable, fast, and secure transactions are essential.
In a new report from global real estate firm Cushman & Wakefield, the benefits of blockchain to commercial real estate is examined along with the potential impact on the industry globally.
The report says that adoption of blockchain in the CRE sector is limited with only a handful of single-family sales having used cryptocurrencies.
“As of today, blockchain and cryptocurrency adoption in our industry is in its early stages, but as with any technology that possesses the potential to essentially redefine how transactions occur in the real estate space, we are paying close attention to it,” Revathi Greenwood, Cushman & Wakefield’s Americas Head of Research, said.
However, Greenwood expects the technology to become more prevalent as operation hurdles are overcome and questions over scalability are answered.
“Our timeline for adoption follows Gartner’s expectations that blockchain technology will be widely adopted in a decade, therefore, we see individual applications of blockchain in the commercial real estate space developing as the technology matures,” he said.
Cross border transactions
Cushman & Wakefield’s Senior Managing Director, Strategic Consulting, Jeff Lessard, says that this technology’s value is transparency and efficiency, which lends itself to a variety of real estate applications from title insurance, due diligence, smart contracts and their supply chain management processes.
“This improved efficiency will have numerous financial benefits, including reduction in friction costs of commercial real estate transactions, like fees tied to document preparation and review,” Lessard said.
Some of the efficiencies that the technology can bring include:
- Asset management: Blockchain can improve how large, multi-tenanted properties and portfolios are managed by facilitating the automation of invoicing, reconciliations, and lease management.
- Property searches: Blockchain has the potential to disrupt and transform property searches on a global scale by increasing transparency and access.
- Smart contracts: Improve transaction process through increased transparency which leads to speedier closings. Documents on a blockchain will remain immutable; however, amendments can be appended to show changes which must be approved by all parties. Due diligence will most likely remain the same with the added requirement that technology experts who understand blockchain will need to be added to the process.
The full report is available at cushmanwakefield.com