Imagine a world where property transactions are fast, efficient and free of cumbersome contracts. Five years ago, this may have seemed like a pipedream that was light years away. But as new technology begins to seep into the commercial real estate landscape, this dream could soon become a reality. […]
Five years ago, this may have seemed like a pipedream that was light years away. But as new technology begins to seep into the commercial real estate landscape, this dream could soon become a reality. Blockchain, the technology that allows information to be stored and distributed through a digital ledger, will begin to impact commercial real estate. Blockchain functions on a decentralized system, meaning transactions can be completed without intermediaries. Instead, digital contracts allow users to exchange anything of value, from property to shares, through an encrypted ledger that can be stored and shared.
The problem is, many professionals don’t know how to prepare for this new technology or how it will impact them.
“There are a lot of people who say that blockchain will not have an impact on commercial real estate any time soon,” said RSM U.S. principal Jay Schulman, who leads the company’s blockchain and cryptocurrency practice. “Blockchain’s impact on the commercial real estate industry will not happen right away, and there won’t be any sort of big bang, but these changes will begin to happen bit by bit over time. The industry needs to be paying attention to it. The ones who aren’t paying attention are the groups who will be impacted the most.”
Since the commercial real estate industry is composed of various asset classes and company types, the industry will be impacted in several different ways, including through property transfers. Blockchains store information by containing it within an encrypted, distributed ledger of transactions and contracts, allowing people to complete property transfers via a smart contract. The consensus validation required to create blockchains enables credible transactions to occur via these smart contracts without a third party.
Some local governments and municipalities are already testing this concept. Last year, the Cook County, Illinois, recorder of deeds participated in a study that looked at how blockchain could streamline the county’s records process.
“Our main takeaway is that it could reform the entire way that government develops and procures technology,” Cook County deputy recorder for information technology and communications John Mirkovic said to the Chicago Tribune. “For real estate, it has the opportunity to remove people from the transaction who don’t add value outside the system. They provide value within a broken system. If you fix the system, they become unnecessary.”Continue Reading Original Article