Ever since the world faced recession, the real state industry has grown prominently. As the demand has increased in recent times and will continue on increasing due to the nature of the business, the prices have also gone up inevitably. Since recession, the real estate market has continually improved but there are still various issues that can cause damage to the industry and one of them is the hardships one faces in investment procedures. The real estate industry faces the following major challenges that are harming the industry:
- Involvement of third parties and middle-men
- Unavailability of reasonable funding options
Third party involvement in the real estate business means using services of real estate agents who take up to 6% of the total payment on purchasing a real estate asset. Sadly, around 80% of the people use the services of a real estate agent and are bound to pay this added fee, according to reports. This practice automatically records as costly to buyers who look to invest in the real estate industry.
As we know, the prices of real estate are going higher ever since recession hit and thus causing inability for most people to make investments in this industry. Research has shown that only 10% of the households in the US can actually afford around 270 square feet of property in New York worth $1 million and the rest do not have enough resources.
Another major threat is the increased fraud in the real estate industry and not only in the local market but also globally. In the late 2016, fraudulent activities in this industry had increased by 480% according to a statement issued by the FBI. These activities mostly take place through verified platforms, as a results of scams and title fraud.
So is there a system that can help solve these problems? Maybe the blockchain technology? It may not have yet been implemented in this industry but has surely worked in others. Yes, blockchain has contributed in providing security to investors in the value exchange industry. The urge to include an intermediary was also disrupted as blockchain itself works as a platform that allows people to communicate with each other directly without any third party involvement and also gives transparency and protection.
Using the blockchain technology in the real estate industry is actually a good idea as it may give solutions for major drawbacks faced in this space. First of all, as said earlier, the need for an intermediary can be eliminated using the blockchain technology as investors, buyers or sellers will not have to involve agents to represent them which will eventually cut their costs (commissions) and bring transparency in their actions. Secondly, when buying property using the digital currency, buyers or investors could avoid paying additional bank charges and can also avoid fees incurred with third party involvements by developing customized smart contracts according to the user’s needs.
For people who find it hard to purchase expensive property, through blockchain, they can buy portions of the land. Certain amounts could be paid using cryptocurrencies for specified piece of land which can be recorded on blockchain as tokens, similar to getting shares in an organization. This can help more people acquire property, even those who cannot afford massive lands can at least, get some on their names.
Finally, as we know that the blockchain technology provides a platform for users where they can share their data with other users in order to make sale or purchase and the blockchain technology records that data and secures it, thus preventing fraudulent activities. This implementation in the real estate industry can restrict or even eliminate such activities. As users can share information regarding sale or purchase of property, blockchain stores the data and any transaction made on the platform would also be recorded. This can reduce the fraudulent activities in the real estate industry as it has successfully done in the world of trade through the information stored on blockchain.
Several organizations have realized the need to introduce blockchain technology in real estate industry. One of these companies is i-House which has introduced blockchain related projects in less than one year. They allow users to invest in property developments using the company’s own digital currency, IHT. i-House’s implementations in this regard have so far been proved successful as they have managed to expand their business globally to US, Japan, Thailand and Philippines.
On bringing this new reform in the real estate industry, Chairman and Founder of i-House, Ricky Ng. explained:
We aim to create a shared economy asset management ecosystem that spans across the globe, i-House ATO provides real estate owners, developers, and end users the means to own and share assets easily.
Since the company’s own cryptocurrency is used for activities related to real estate, IHT has evolved globally in the crypto industry and has caught the eye of many investors.
As they say, “there is always room for improvement” and considering the real estate industry’s current scenario, there’s plenty room here. By implementation of blockchain technology in this industry, processes can be made simpler and safe whether it has something to do with payments or record-keeping.
Therefore, as i-House has capitalized on the opportunity in this industry, the talking point is whether it is going to be followed by other organizations. Will the need for change be realized sooner or later? I’ll go with soon.