Real estate investors expect to see the first property lease contracts based on blockchain to emerge by 2022.
The finding comes from BrickVest, the commercial real estate investment platform, which recently asked investors for their views on the disruptive technology. On average, respondents said that it would come into use within four years’ time, but 25 percent of investors also predict that blockchain will be behind some leases as early as 2020.
In addition, six in 10 real estate investors expect the industry to adopt blockchain technology for transactions, a 9 percent increase on 2016. In contrast, just 18 percent of investors do not expect to see the future use of blockchain in property transactions.
Respondents told BrickVest that blockchain’s main benefit will be to speed up the process of buying and selling a property through smart contracts. Investors also expect it to make transactions cheaper to execute and reduce fraud. Greater transparency and a larger secondary market were other benefits cited by property investors.
The biggest obstacle to the introduction of blockchain, according to 62 percent of property investors, is a lack of knowledge and education into the benefits it brings, closely followed by the integration challenges with existing regulatory and legal frameworks (59 percent).
Nearly half of investors also believe that there is a reluctance among banks, insurers and private equity firms to invest in the technology, while 41 percent cited the opposition by the financial gatekeepers, such as notaries and trustees, whose existence is threatened by blockchain.
Rafal Okninski, chief technological officer at BrickVest, said: “When it comes to the eventual use of blockchain in property deals, most real estate investors now see it as ‘when’ rather than ‘if’. There has been a lot of publicity about blockchain in the past two years, so it’s no surprise that more investors expect to see its usage, but for many in the industry it remains something of a mystery how it will be successfully introduced and widely adopted given the legal and regulatory complexities.
“We believe awareness and support of blockchain as a positive force among real estate investors is rapidly growing. Once it’s introduced, blockchain will revolutionize the market and bring greater transparency to what remains an opaque and old-fashioned sector.”
