Tokenization of Commercial Real Estate
The commercial real estate industry is ripe for technological disruption, particularly in terms of data transparency. Access to market information is tightly controlled by brokerage firms, institutional investors, and expensive market data providers. Investment brokers play a critical role because of their relationships with buyers and sellers and ability to gather information from these participants. On the other hand, given all of the administrative and legal hurdles associated with trading commercial real estate assets, transactions are slow and costly.
The blockchain will enable real estate assets to be tokenized and traded similarly to Bitcoin. Property titles and ownership histories will be recorded on the blockchain, and the value of a property will be represented on the blockchain by a token. Blockchain will allow commercial buildings to have a digital address that contains information regarding occupancy, physical characteristics, legal status, historical perfomance, and financial position. As commercial property information continues to disseminate across the globe, brokers will lose their information assymetry advantage. The data will be available online and relatable across submarkets and property types. When it becomes easier for investors to gather information on potential acquisitions, it will be easier to price buildings without investment brokers.
In terms of how the marketplace infrastructure could evolve, an exchange platform could be built as an application on top of a universal real estate blockchain, which would allow two parties to make real estate trades in a much more timely and less costly manner. Commercial property could be traded similarly to equities. Transaction times will be reduced from weeks/months to minutes. Peer-to-peer commercial real estate trading will become a reality as blockchain technology erodes the information advantage of commercial brokers and operational impediments are reduced. Commercial real estate will become a much more liquid and actively traded asset class.
Steem on,
Josie
Co-founder of a startup in RETech - I certainly agree with you here. Maintaining the accuracy of this data though - that's a serious challenge.
Building an incentivization model around all of this to create an ecosystem... if you have ideas, hit me up.
Have you checked Bitshares yet?!? ;) there's a platform we can all use to develop such product I believe... Namaste :)
@eric-boucher, I look forward to Bitshares mooning. Nakamoto be with you.
What about ethereum, or hyperledger?
I wouldn't know, but have great confidence in the Bitshares/Bitcoin crew who created this in the first place. :)
@vongohren, I think there will be a lot of opportunity to develop real estate applications on top of ethereum. Here is an example http://www.reidao.io
@jacobt, thank you
@jacobt @blockchainblonde I'm close to luanching this very thing and would be happy to chat with each of you for insights, input and thoughts on the evolution of the concept since this convo was posted a year ago.
This is being worked on by the big players already.
See JP Morgan's report on how blockchain tech will change the industry:
"The third wave involves the adoption of blockchain
technology in major pieces of capital markets infrastructure.
Once assets are held as tokens on the blockchain, the clearing
and settlement of trades across multiple asset classes can
move to distributed ledger-based infrastructure, as opposed
to the hybrid or dual systems that we project through the
first two waves. This will drastically cut processing cycles
and unlock liquidity...
Use Cases: Builds on peer OTC trading networks
referenced above, but digitizes assets
such that ownership can be transferred
and recorded via the ledger
Eliminates need for agents and
intermediaries
Significantly speeds up settlement
processes "
Full report:
http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2016/july/joint-report-by-jp-morgan-and-oliver-wyman-unlocking-economic-advantage-with-blockchain-A-Guide-for-Asset-Managers.pdf
Its full on already with FACTOM. Its been adopted around the world, China is front out on a blockchain based Kataster. IBM and BNY Mellon are in on it. https://www-03.ibm.com/press/us/en/pressrelease/49632.wss
Amen!
In the furture all of assets to be tokenized and traded similarly to Bitcoin.
Example : Gold https://digix.io/
Agreed...we will all be out of jobs! Yikes!
This could all happen in theory, and could've happened years ago, if we didn't have such a centralized control-freak bunch of clowns controlling the world out of a Washington D.C. People like Obama, Hillary, and all those losers who pretend they're relevant when all they know how to do are primitive things, on their best day.
Great article and ready for some extra Bitshares knowledge to come across you to use as a platform for proper incentivization. The Bitshares platform itself is the ecosystem you are looking for I believe and, while working on maintaining accurate data, uses blockchain technology such as Steem! ;) Enjoy! Namaste :)
👍great post Josie...
Thanks :)
Even though this sounds like a good idea, we are still at an experimental stage of cryptocurrency and there are really no systems bulletproof enough to put legal obligations for house titles on. A currency that you don't have all your wealth in is one thing, but if the only place your house title was stored is on the Bitcoin blockchain, that would be kinda scary when a "Bitcoin Classic" vs "Bitcoin Core" rough consensus attack occurs.
Don't wish for too much from the "blockchain", otherwise you're going to get a federated chain government ledger forced on you.
Great article. It is clear that blockchain will introduce an element of disintermediation to real estate buying and selling. Do you have any thoughts on what effects the blockchain have on ownership? How will affect landlords? How will it affect renters? How will it affect financing?
@jrtowell, I think in terms of financing, it will allow various aspects of the financing process to be automated with smart contracts. There are a lot of pain points within the financing of real estate construction projects that could be eased with programmable financial logic.
One more to check out:
http://www.ibtcrea.org/