The rapid development of blockchain technology has steadily transformed numerous sectors across industries. In line with this trend, the real estate sector is also experiencing significant changes thanks to blockchain’s advantages. This technology could serve as a powerful catalyst, accelerating Vietnam’s real estate market growth in the digital era.
Blockchain and Real Estate
Compared to about 10 years ago, the concept of Blockchain today is no longer strange to most people. However, how many of us can confidently explain clearly: “What is Blockchain?” Probably not many.
Simply put, Blockchain can be thought of as a digital ledger managed by a decentralized network. This gives Blockchain clear advantages over traditional platforms, including immutability (cannot be modified), forgery prevention, digitalization of contracts, and enhanced security, thus ensuring absolute transparency in transactions.
Clearly, the advantages that Blockchain offers can easily solve long-standing complex challenges in the traditional real estate sector:
- Limited Accessibility: Numerous barriers—financial, banking, property valuation—have historically made real estate an exclusive field, inaccessible to many.
- Transparency Issues: Traditional real estate transactions are frequently associated with corruption, tax evasion, and money laundering, leading to questions about transparency.
- High Costs: Various costs arise during real estate transactions, including exchange fees, transfer fees, brokerage fees, and legal expenses.
- Slow Transaction Speeds: Complex procedures and paperwork traditionally slow down real estate transactions significantly. Liquidity issues and limited accessibility further complicate the market.
Given Blockchain’s potential to address these challenges, it’s understandable why its applications in real estate are expanding rapidly. It’s fair to say that Blockchain technology is creating a real revolution in this sector.
5 Key Blockchain Applications in Real Estate
In October 2017, South Burlington, Vermont (USA) became a pioneering city in applying Blockchain to real estate. By 2020, a luxury high-rise in New York City was sold for $30 million through Blockchain. In Vietnam, Blockchain began gaining traction in real estate from early 2020, becoming widely accessible by mid-2021.
These examples highlight how Blockchain is reshaping the real estate landscape step-by-step.
1. Platforms and Marketplaces
Real estate fundamentally involves connecting buyers and sellers—traditionally a challenging process. Blockchain simplifies this by tokenizing physical assets, enabling trading on online platforms similar to stocks, enhancing market liquidity and diversity.
Virtual property tours, smart contracts, online rent payments, and maintenance requests become seamless with Blockchain. The technology ensures secure interactions, verified identities, and encrypted data.
Blockchain enables cross-border real estate transactions effortlessly. Investors can now buy or rent properties in New York or Tokyo from Vietnam without leaving their homes, overcoming geographic and privacy barriers.
2. Minimizing Intermediaries
Intermediaries such as brokers, lawyers, and banks significantly increase transaction costs and prolong processes. Blockchain reduces the need for these middlemen through automated online platforms, streamlining and expediting transactions.
3. Enhancing Liquidity and Fractional Ownership
Real estate has historically been considered an illiquid asset due to high values and lengthy transaction processes. Blockchain addresses this by enabling fractional ownership—properties are digitally divided into smaller units for easy trading. Sellers no longer need to wait for buyers capable of purchasing entire properties; partial ownership can be bought and sold, significantly increasing market liquidity.
4. Transparency
Past real estate crises often resulted from a lack of transparency. With Blockchain, all critical information (architectural documents, technical plans, equipment manuals) is publicly accessible, building trust in the system. Digital contracts significantly reduce fraud and enhance overall transaction transparency.
5. Cost Reduction
Blockchain’s decentralized network and transparency substantially lower transaction costs. Beyond eliminating intermediary commissions, other expenses like inspection fees, registration, lending costs, and taxes can be significantly reduced or eliminated, thanks to automation and decentralization.
Real estate, a market valued at hundreds of trillions of dollars globally, has historically been dominated by the wealthy and large corporations. Blockchain opens doors for many individuals, enabling transparent, secure, and fairer transactions. With its continuous growth, Blockchain is undoubtedly revolutionizing every aspect of real estate in the near future.
References:
(1) Investopedia. 2020 How Blockchain technology changing real estate
(2) Entrepreneur. 2022 Blockchain technology is revolutionizing real estate. Are you ready to cash in?
(3) Vnexpress. 2022 Ứng dụng Blockchain trong lĩnh vực bất động sản
(4) Tapchitaichinh. 2021 Bất động sản “không biên giới” với Blockchain
(5) Savills. 2018 Ứng dụng công nghệ Blockchain vào thị trường bất động sản
(6) Bytesoft. 2022 #Cuộc chơi thay đổi – Ứng dụng Blockchain trong bất động sản
(7) ButterflyMX. Blockchain in Real Estate: How It’s Revolutionizing the Industry
(8) ThitruongBiz. 2022 Bất động sản Blockchain xu hướng thế giới và câu chuyện của Việt Nam
(9) ERPViet. Công nghệ Blockchain và các ứng dụng trong thực tiễn
(10) Bytesoft. 2022 Blockchain là gì
