The commercial real estate (CRE) industry appears to take pride in keeping several aspects of its operations secret, such as comparable lease rental rates, property prices, and valuations, to create a possible competitive advantage. However, secrets are hard to keep—and may not even be desired—in today’s hyperconnected and digitized world.
In response to greater demand for transparency, technology advancements and the disintermediation by startups are gradually making some of this information public.1 As a result, property-related information is increasingly available in digital and paper form. However, a significant portion of the digitized information is hosted on disparate systems, which results in a lack of transparency and efficiency, and a higher incidence of inaccuracies that creates a greater potential for fraud.
Blockchain technology—a digitized, distributed ledger that immutably records and shares information—could enable the CRE industry to address these inefficiencies and inaccuracies. According to a 2015 World Economic Forum survey of 800 executives and information and communications technology sector experts, 57.9 percent of the respondents believe that 10 percent of the global
GDP information will be stored on blockchain technology by 2025.
Until recently, blockchain was known more as the technology powering Bitcoin. However, industry players now realize that blockchain-based smart contracts can
play a much larger role in CRE, potentially transforming core CRE operations such as property transactions (purchase, sale, financing, leasing, and management).
Over time, blockchain adoption can have a broader impact, as it can be linked to public utility services such as smart parking, waste, water, and energy billing, and
also enable data-driven city management. In this report, we will dive deeper into the value proposition of blockchain technology and its applicability to property leasing and management, and purchase and sale transaction processes.