- Richard M. Gatto
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Blockchain: CRE’s Next Big Thing
Chances are that if you work in commercial real estate and pay attention to the most recent trends and innovations in the industry, you have read articles discussing blockchain or at least have heard the term being bandied about.
Chances are that if you work in commercial real estate and pay attention to the most recent trends and innovations in the industry, you have read articles discussing blockchain or at least have heard the term being bandied about. Many industries, including commercial real estate, are trying to understand the true benefits of the software to see if it’s worth the money and time to modernize their systems and practices. So, is blockchain just a fad? Is it worth investing time and money into?
In its most commonly used form, blockchains are public or private digital ledgers that can record financial transactions and virtually everything of value. Without using a third party, it allows users to transfer and share digital assets from peer to peer. Ragnar Lifthrasir, founder of blockchain software company, velox.RE, and the International Blockchain Real Estate Association (IBREA), thinks it certainly will transform the industry. “Blockchain is going to become the new operating system for real estate,” he commented. Blockchain technology has begun to pique the interest of many real estate professionals, as it can address some challenges in CRE leasing and purchase and sale transactions, according to a recent Deloitte case study.
In real estate, Blockchain is able to address inefficiencies and inaccuracies in comparable lease rental rates, property prices, and valuations – all attributes that develop competitive advantages in the marketplace. More specifically, it can help alleviate some existing challenges, such as inefficient property searches due to fragmented listings data, complexity in managing ongoing lease agreements, property operations, cash flows, time-consuming, predominantly offline due-diligence processes, and the absence of real-time rich data decision-making capabilities.
Despite its benefits, industrywide adoption has been very slow. So, we ask, why hasn’t it taken over? One factor is the perceived complexity of the technology and another is security concerns. In an industry that is historically slow to innovate, it’s understandable, yet to stay relevant, companies should at least begin to have the blockchain conversation and become aware of its presence. Already, some of the largest brokerage multinationals have convened committees to study the impact of Blockchain. How long will it take for rest of the industry to catch up?