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The Maharashtra government has started property e-registrations and is, reportedly, all set to introduce blockchain.Therefore, it is important to understand what blockchain is and its future in real estate.
What is blockchain?
Blockchain is a technology by which users can keep a historic ledger of every transaction for any asset, be it a crypto currency or a piece of real estate like land or building.
With blockchain, the traceability of past transactions is greatly enhanced.A report by Deloitte says that blockchain could soon change how real estate transactions work.With virtual tours, direct communication between the buyer and the owner and a complete paperwork guide, parties can avoid intermediaries.
Blockchain is also useful in cases where the number of transactions is low but the requirement for traceability is high and goes back several years, as in the case of real estate.A blockchain ID for every land parcel in the country, for example, could greatly reduce the time required for due diligence for land-related transactions.The technology could create a system of real estate tokenisation, which will pave the way for the fractionalisation of real estate.
However, for these ideas to be reliable and trustworthy, the market has to understand and accept this relatively new technology.Hence, much volatility may be expected in the next few decades and several questions may be raised, such as:
– How can blockchain change real estate?
– Is blockchain the future of real estate and does it have the potential to make transactions more transparent?
– What should be the ideal blueprint to make the transition from digital property registration to blockchain?
– Is blockchain fraud-proof?
Blockchain in real estate
The real estate sector has been functioning conventionally for years with several processes and government details managed by local government offices, traders, brokers and other interested parties.
It is a tedious procedure that often discourages potential investors.
Blockchain technology provides a solution for observing, recording and conducting developments on a single online platform that connects buyers and sellers.The tiresome tasks would function smoothly and effectively, streamlining future real estate processes.
Blockchain stores data in the form of blocks while ensuring end-to-end encryption, clearness and delegation.It is difficult to update, modify or tamper with the data, once it is stored in the blockchain.It shows flawless and unaltered data to permitted members without interference from unrecognised entities.
This boosts transparency in a sector that has historically been known for its conventional and complex working style.This manner of asset management can encourage foreign and smaller investors who are comfortable with a professional and faster style of working.
See also: Virtual reality, AI, blockchain to radically transform Indian real estate
Blockchain advantages for the property market
Tushar Shrivastava, co-founder and CTO, PropertyPistol.com, agrees that blockchain technology is a great way of keeping records, simplifying transactions and tracing products and services in a business.Blockchain is ideal for businesses that run on data.It is a shared, unchallengeable ledger that provides immediate and transparent information to permitted members.
The vital procedures of sales, registrations, payments, accounts and projects are saved in one window with all the transaction details.
“With shared data, the procedure is recorded only once, thus, avoiding duplicity.This would ensure work efficiency and accuracy without the chance of errors.
Real estate is a business that needs a huge amount of data storing and sharing that regular data storing software often fail to fulfil appropriately.The developer, seller, investors and property consultants handling complicated data can receive compact and easily accessible information in a single software, thus, avoiding confusion.Blockchain allows for details to be processed quickly, without hassles and restricts access to permitted members, thereby avoiding repetition of data,” Shrivastava explains.
Aditya Kushwaha, CEO and director, Axis Ecorp, points out that at present, property ownership is determined by the government’s property registrar office, as per written laws and regulations.This may get replaced, in the modern and digital age.
A blockchain ecosystem efficiently offers ownership rights, eliminating paperwork, bureaucracy and expense, while ensuring openness.These are tenets that everyone can firmly and calmly accept.
“Under the new system, data once stored cannot be changed, eliminating risks of impersonation and unauthorised tweaking of records.Each property holder must be given a property card, which can be accessed through a PIN.The property transaction details can be accessed only after authentication of the user’s digital key or PIN.
From a user’s point of view, this system protects property data, apart from removing the hassle of storing document hard copies.
Users would be able to swipe the card at citizen service centres and download or print the same,” says Kushwaha.
Vinit Dungarwal, director at AMs Project Consultants, maintains that the real estate market is being transformed by blockchain technology and it will make future transactions safer, transparent and efficient.A blockchain transaction is extremely safe, as it is validated by a network of computers.“Blockchain technology produces a transparent and immutable/unalterable information chain.The ideal and the most effective way to transition would be to integrate blockchain with existing property registries,” says Dungarwal.Overall, blockchain technology can significantly streamline and simplify the real estate transaction process and may aid in enhancing security and decreasing instances of fraud, he adds.
How soon can the real estate industry move towards blockchain?
From physical documents to digital property registrations, the next step towards blockchain would open Indian real estate to pioneering technology that will preserve huge amounts of data without corruption, damage or loss.
This will benefit institutional and small investors, fractional owners, NRIs, foreign companies looking to invest in India and the real estate investment trust (REIT) stakeholders.
While Maharashtra has taken the lead, it may take a significant amount of time for the real estate sector to make a complete transition to blockchain.In a densely populated country like India, digital property registration is still restricted to metros and tier-2 cities.
Several villages in India started using computers in the late 2000s, slowly initiating technology usage.Starting on a pilot mode with selected registration offices, blockchain can be adopted in the rest of the country, depending on its success and popularity among the involved stakeholders.
(The writer is CEO, Track2Realty).