Blockchain and real-estate
The public health crisis linked to COVID-19 and the resulting containment measures have completely changed the way companies work
The COVID-19 health crisis and the resulting containment measures have completely changed the way companies work. While some companies had not yet fully completed their digital transformation, the crisis has considerably accelerated their thinking on the subject. For example, portfolio management companies are looking into the possibility of automating and digitizing real estate transactions.
Blockchain appears to be one of the most effective potential solutions in terms of the advantages it offers: highly accelerated, fully digitized, secure and fluid processes.
Blockchain is a proven Technology
Blockchain is a transparent and secure data storage and transmission technology which operates without any central control body. Whilst it started out as a way to exchange units of value such as bitcoins, it also provides a means to exchange all types of digital assets.
Its major advantage is the immediacy of the operation. Once the assets have been transferred, they are integrated into the owner’s registry. But this is not the only advantage of blockchain. It can also simplify formalities, increase transparency, secure data exchanges, reduce the number of involved parties and reduce costs. In short, this is a technology which makes processes simpler, quicker and cheaper.
Adapting Blockchain to real- estate
Whilst banks are already showing a lot of interest in the subject, the real-estate sector is still advancing quite slowly on the use of blockchain. However, real-estate does appear to be perfectly suited to blockchain considering the size of the assets, the associated flows and the enormous quantity of documents generated. This technology brings the necessary de-centralisation, transparency, contractual automation and traceability for a market where proof and authenticity are essential.
This concerns all of the real-estate specialisations. Blockchain will thus transform the management of land registries, transactions, property investment, the rental market and building operation and management.
During the Mipim PropTech in June 2019, Primonial REIM worked with the Olarchy start-up to use blockchain to reproduce the transaction for the In & Out building (35,000m2) in Boulogne-Billancourt. The biggest job was clarifying all of the different stages that go to make up a complex real-estate transaction such as the In & Out transaction. Once these stages had been clearly identified the different parties involved were able to work on the development of an application to create a link-up between the traditional transaction mechanism and its blockchain version.
In this way all of the different stages that led up to the signature were replicated. A first in France
We were able to demonstrate that this tool will allow us to delete some of the data asymmetry, and offer integrity and traceability guarantees, especially for the documents exchanged during the transactions or in datarooms.
Being sure that we are all talking about the same document and also having unimpeachable proof of the complete deal process are two elements which seemed very important to us right from the start. And the amount of time saved seems to be over 20%.
This application has allowed us to assess three main orientations: improving the transaction procedure even further (notably for the financial aspects), simplifying the evaluation process, simplifying relations between landlords and tenants.
Laurent FLECHET, Primonial’s Assistant Managing Director in charge of real-estate explaining the issues surrounding blockchain to CBRE. April 2019
Since the confinement period associated with the covid-19 public health crisis where a part of France came to a standstill, some are asking how to further simplify and digitalise processes and be able to deal more easily with this kind of crisis in the future.
The question of how to complete real-estate transactions was on everyone’s lips. And it took some time for the various professionals involved to adapt to the situation. And that is where blockchain would have clearly smoothed things out. Consequently, those professionals likely to be affected by the development of this technology have every interest in taking the subject seriously. For the moment real-estate blockchain start-ups are developing mainly in the Anglo-Saxon countries where notary procedures are much less regulated that in France.
*A “security token” us a “tokenised” financial asset on a blockchain which is (theoretically) available on the “crypto-assets” market. These tokens appear as digitalised financial assets which can be used to create holdings (ownership shares) and complete almost instant transactions. - bitcoin.fr