The commercial real estate industry is ripe for technological disruption, particularly in terms of data transparency. Access to market information is tightly controlled by brokerage firms, institutional investors, and expensive market data providers. Investment brokers play a critical role because of their relationships with buyers and sellers and ability to gather information from these participants. On the other hand, given all of the administrative and legal hurdles associated with trading commercial real estate assets, transactions are slow and costly.
The blockchain will enable real estate assets to be tokenized and traded similarly to Bitcoin. Property titles and ownership histories will be recorded on the blockchain, and the value of a property will be represented on the blockchain by a token. Blockchain will allow commercial buildings to have a digital address that contains information regarding occupancy, physical characteristics, legal status, historical perfomance, and financial position. As commercial property information continues to disseminate across the globe, brokers will lose their information assymetry advantage. The data will be available online and relatable across submarkets and property types. When it becomes easier for investors to gather information on potential acquisitions, it will be easier to price buildings without investment brokers.
In terms of how the marketplace infrastructure could evolve, an exchange platform could be built as an application on top of a universal real estate blockchain, which would allow two parties to make real estate trades in a much more timely and less costly manner. Commercial property could be traded similarly to equities. Transaction times will be reduced from weeks/months to minutes. Peer-to-peer commercial real estate trading will become a reality as blockchain technology erodes the information advantage of commercial brokers and operational impediments are reduced. Commercial real estate will become a much more liquid and actively traded asset class.
Steem on,
Josie