Digital is gradually infiltrating the real estate sector. From now on, tenants are looking for an apartment on virtual or 3D maps, future buyers carry out their procedures online on specialized sites, for example their credit simulation with Cafpi or their insurance contract on dedicated platforms.
In recent years, a new technology has joined these innovations: the blockchain. It allows information to be stored and transmitted in a secure and transparent manner. It is comparable to a register in which all the history of the exchanges carried out are kept. The blockchain is useful both for carrying out transactions and for certifying information. Its role is gradually taking shape in the real estate sector.
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The blockchain, a way to streamline and secure real estate transactions
Real estate transactions are punctuated by many steps, which require the presence of several actors: real estate agents, notaries, bankers, insurance consultants… This can be a real obstacle in the proper transmission of information. It is therefore not uncommon to have to revise your sales agreement or rental contract several times. Sometimes new administrative procedures are added. This turns transactions into a long process.
It is to this type of problem that the blockchain responds. It allows real estate transactions to be carried out automatically, transparently and securely, in particular thanks to the Smart Contract. Concretely, it is a computer protocol that defines and freezes the rules of the different parties to an agreement. When one of the pre-requisites is met, it automatically ensures the transfer of an asset to the person concerned. The entire contracting process is therefore automated and streamlined, from drafting to finalizing the contract.
These smart contracts would be a solution as much to reduce the costs and delays of real estate transactions as to secure their progress. Indeed, their automatic nature could lead to the cancellation of a contract in the event of breach of the pre-established terms. They would thus make it possible to ensure that mutual obligations are respected. Otherwise, the Smart Contracts could make an automatic refund or suspend a payment and inform the bank.
Note that this technology is also useful for automating certain operations, such as verification and certification of information, in order to improve document controls and reduce the risk of fraud. Blockchain could then inject more transparency and security. Smart contracts have already been adopted in several countries, including Sweden.
Democratize real estate investment
Many people turn to real estate to invest their money. However, the constant rise in housing prices complicates this process. In the third quarter of 2021, the price per square meter reached 2,355 euros for houses, and 3,878 euros for apartments in France (Insee study on old real estate). This marks an increase of 7.4% for houses, and 5.3% for apartments. For a large part of the population, it is therefore becoming more and more complex to acquire property. This is all the more complicated when you are freelance or employed on fixed-term contracts, because banks have difficulty granting a mortgage due to the characteristics of these statuses.
The blockchain could then play a central role in the democratization of real estate investment. This technology is based on crypto-currencies or exchangeable tokens (like the token). These can be bought, resold, exchanged or transferred between two parties without the intervention of a third party, including banks.
It is on these tokens that real estate is betting to open up to more individuals. Indeed, tokenization makes it possible to split the shares of a property for sale, and thus to simplify access to ownership for small savers. The blockchain will be used to memorize and verify the transactions carried out, but also to authenticate part of a property owned by the buyer. The token then becomes a trusted third party.
The blockchain therefore appears as a technology that can meet multiple challenges in the real estate sector: security, speed and accessibility.