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It's difficult to identify an industry that hasn't been affected by blockchain given how the banking and finance industries are being drastically disrupted by this technology. In actuality, not even real estate was immune to the disturbance. We will now look more closely at how and why blockchain for real estate may mark this industry's turning point.

In truth, the global economy as a whole benefits greatly from commercial real estate. The global real estate market grew from $8.9 trillion in 2018 to $9.6 trillion in 2019, according to MSCI. Although it may appear that the industry is performing well, there are actually significant frictions and liquidity problems.

Now only the wealthy can invest in the market because it is too volatile. It's interesting to see the rise of numerous blockchain-based real estate businesses, which currently aim to revolutionise this sector's operations.

The threat is serious and will soon render obsolete the conventional real estate practices. Therefore, incorporating blockchain into their business strategies is the only option for this sector to thrive.

Because of this, I'll go into detail in this book on how technology is changing the real estate industry and why, at the time, blockchain was the greatest strategy for real estate efforts.

What Are The Biggest Issues With Real Estate?

1. Not Acceptable To All

Since the beginning, only wealthy people have chosen to invest in the real estate sector. Formerly middle class people could try to use this as an option, but it is far above their means. For the middle classes, there aren't many assets that can replace real estate. But why is the current scenario so difficult?

The majority of the populace does not actually have access to real estate due to numerous obstacles. Some of the main obstacles include financial needs, fund managers, accreditation, international bank accounts, credit scores, citizenship, and access to the right sponsor.

2. Transparency Issues

This industry is severely afflicted by the degree of dishonesty and corruption. Since the business process has no idea of transparency, it deals with tax evasion, fraud, money laundering, and other issues.

Between $800 billion and $2 trillion are laundered annually worldwide. And a sizable chunk of it comes from real estate schemes. Furthermore, it is estimated that $1.6 trillion is being laundered through real estate.

It is clear that the government is having difficulty handling such a large issue. Therefore, the business model can combat corruption if it begins to include transparency.

3. Very Expensive

Investors that are interested in foreign real estate investments should be especially concerned about this. But they must pay enormous costs in several phases in order to do that. Broker costs, exchange fees, taxes, attorney fees, transfer fees, investment fees, and so forth are a few examples.

Additionally, because there are so many intermediaries in this industry, your total investment budget will increase as a result of the individual cutbacks they all take. Additionally, you must keep in mind that you will want the services of accountants and legal counsel in order to maintain accurate tax records.

Overall, it turns out to be an expensive investment choice.

4. Low Levels Of Liquidity

Everyone is aware of how challenging it is to sell real estate assets, I suppose. It's one of the main causes for why this industry must alter. When I refer to liquidity in this context, I mean how rapidly you can turn a real estate asset into cash. There aren't many purchasers available to help you sell your asset when you need it because of the hefty costs and high value point of real estate assets.

As a result, selling it is much more difficult than selling other kinds of assets. The issues are entry hurdles, a lack of supply, an abundance of rules, drawn-out procedures, etc.

All of these issues deter prospective buyers from making real estate investments.

5. Hefty Price Commitments

Another problem that keeps the middle class from ever seeing real estate as a viable choice is this one. In actuality, this kind of investing necessitates a sizable initial expenditure. Not many people have the means to do that. And only a few members of higher classes are able to demonstrate so much capital up front.

Investors frequently need to look for more expensive alternatives in order to commit to a price. Additionally, placing a bet of this size on an asset entails a significant risk due to the market's volatility. Even if you have a great credit rating in your home country, you cannot use it in foreign markets.

6. Transaction Speed Is Slowly

The horrifying aspects of real estate purchasing begin with the incredibly slow transaction times. This industry frequently not only wastes a great deal of resources, but it also commits a great deal of mistakes. Additionally, it requires a lot of time to discover the suitable property.

It appears that it takes an average of six months to identify a property and another six months to complete all the necessary acquisition procedures. That is a tremendous amount of time to invest in scams.

All of this will help you understand why this industry currently requires a disruptive force.

Real Estate Is Being Disrupted By Blockchain Technology

A new technology called blockchain makes it possible to send data securely from one party to another. It's a distributed, secure digital ledger of transactions, agreements, contracts, and other records, to put it briefly. It sprang from the demand for a reliable, unchangeable, and open system.

There are many things that blockchain technology has the ability to change. It might, in some ways, be a natural replacement for a centralised system that has a bottleneck.

We are all aware of the numerous issues the globe faces and how to address them. There is no exception in the real estate sector. Lack of transparency, a lot of uncertainty, and a lot of fraud are the present issues facing the sector.

All of these issues can be resolved by blockchain technology. There will be a lot of changes in the real estate sector in the near future, particularly with regard to real estate transactions. We will be able to have greater transparency, do away with the intermediary, and save a tonne of money by using blockchain technology.

One of the most conservative industries historically is the real estate one. Any improvements to the industry are exceedingly challenging to implement. The real estate sector is shifting due to blockchain technology.

Numerous blockchain-based businesses are upending the real estate sector by altering how consumers view the market. These businesses offer new methods for searching for properties, buying or selling them, paying for them, managing them, and other related tasks.