Unlocking the power of blockchain in the property industry

Dobo Radichkov of dubizzle/OLX Ventures discusses how real estate can leverage blockchain

Tags: BlockchainDubizzle (www.dubizzle.com)United Arab Emirates
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Unlocking the power of blockchain in the property industry Blockchain could significantly improve information exchange in real estate, says Radichkov.
By  Mark Sutton Published  November 12, 2018

There are many ways in which blockchain technology is promising to make a significant impact on the real estate industry. These range from improving and streamlining old fashioned paper-heavy processes to completely re-defining and, in some cases, disrupting the way we buy, sell or own property.

At OLX, we obsess with perfecting the experience of buyers and sellers. For me, the obvious use case for blockchain in real estate is streamlining the outdated process of buying and selling a property. Traditionally, this process involves many parties and is a carefully choreographed sequence of events taking place over an extended timeframe. The process is cumbersome and largely relies on collecting and synchronising paper documentation across buyers, sellers, developers, agents, banks, insurers, the government and others.

With the right infrastructure in place, blockchain technology could significantly help facilitate the exchange of information during this process and make the experience easier, quicker and less prone to errors. We are steadily moving towards a world where negotiating the terms of a property transaction, finding and approving financing, getting the right insurance coverage, making the payment, and registering the new owner can all happen in a safe, seamless and paperless fashion in a matter of seconds.

We are still in the early stages of this transformation, but the vision is clear and I am confident we will get there.

The Road to 2021

In order to get there, it is crucial that the government plays a leading role in both enabling and regulating the application of blockchain technology in the industry. Accordingly, in April of this year, the UAE Government launched the Emirates Blockchain Strategy 2021 which aims to transform 50 per cent of government transactions into the blockchain platform by 2021.

The reality is that the cost of not participating in disruptive technologies like blockchain is much higher than the benefit of participating. A tipping point will happen where everyone is incentivized naturally to participate in the ecosystem and those who are already ahead of the curve will have a clear advantage.

It is this mindset that the UAE government has adopted in full force. Here in this part of the world, the UAE and the emirate of Dubai in particular are great examples of a government-led, top-down mandate to overhaul our society through technology. This government initiative and leadership, when combined with private sector innovation, will maximise the impact for participants in the real estate ecosystem.

Disrupting the status quo

Despite blockchain's massive potential, as with any evolving disruptive technology, it does come with its own set of controversies and risks, and it is important that the government takes an active role in regulating the environment and stepping in and protecting consumers and investors when necessary. For instance, the government must take a leading role in defining how land and property registration would work in the blockchain era ideally with input from the private sector.

Security is also a big risk. As the technology is still evolving, security standards are yet to be established and solidified. We've all heard of horrific stories where hundreds of millions of dollars of crypto currency are stolen never to be seen again. In real estate, we are not necessarily talking about cryptocurrencies, but imagine waking up one day to find out that you no longer own your property as an unknown hacker has stolen and taken over your digital title deed. Of course this can be mitigated - for instance through private or permissioned blockchain networks - but nevertheless the technology is not fully bulletproof yet and this is a risk.

The future of blockchain

There are two main streams of blockchain advancement in the industry. On one hand, you have the government replacing the old paper heavy infrastructure and transforming the processes involved in the various real estate use cases. On the other hand, you also have small startups focusing on innovation and bringing new use cases and propositions to the market.

One such use case of interest is real estate fractional ownership whereby a buyer can purchase a small share of a land or property and repeat this to build a custom investment portfolio around the world. For instance, you could own 5% of a property in Dubai, 5% of a property in London, 5% of a property in Singapore, and so on. Doing this the traditional way would be quite time-consuming and costly and startups are coming up with innovative ways to leverage blockchain to build your bespoke real estate investment portfolio with the click of a button.

In 10 years, I expect the world to be a very different place than it is today and most of the real estate activity to take place online. Think about industries like the airline industry, hospitality, or retail where this has already happened seamlessly and we haven't paused to look back at all. 

It is clear that the future of real estate is online and blockchain is likely to hold a key role of making that future a reality. If we can effectively leverage the power of this technology and unlock its disruptive potential, the possibilities are endless for the property market.

Dobo Radichkov,is Senior Director Innovation, dubizzle/OLX Ventures

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