Better managed real estate with new Blockchain-enabled tool from AFRY
Can Blockchain make real estate transactions more transparent and secure?
AFRY has developed a new blockchain tool for real estate and land registration. Being one of the largest asset classes in the world, real estate becomes a high-value sector for blockchain technology.
Blockchain deployment is experiencing a mad dash across a wide range of industries.
In 2017, the blockchain industry’s market value, which stood at €1.5bn, was dominated by the financial sector, manufacturing, retail and consumer goods, healthcare, and energy. The blockchain market keeps on booming and it is expected to hit around €19bn by 2025 .
The scope of blockchain has now reached the largest asset group in the world, larger than market stocks and securitized debt combined : the real estate sector.
This asset class is worth more than €200tn  with a market size expected to grow from €6.0tn in 2018 to €7.6tn by 2026 . Residential real estate gets the biggest slice of the cake for one very simple reason: emotion. For most citizens a house represents a home, a place to grow a family and a space in this world to be theirs. It is precisely for this very reason that the home will be the single largest financial transaction an average person makes in their entire life.
Investments in the commercial real estate market were predominantly localized in the 1980s. As a consequence, investors made decisions that shaped how that local area would be developed, thus personally influencing the built environment with their vision for the future. However, the real estate sector is now observing one of the largest transformational changes. Essentially, globalisation has made people ever more disconnected from their investments, turning real estate investing into almost a commodity. As a consequence, there is now a long list of intermediators to sustain this investor-asset disengagement in a secure yet expensive fashion. This involves middlemen such as investment brokers, pension funds, private equity funds, real estate brokers, who all incur transaction and service fees as well as intermediation lapses.
The two biggest technological leaps in the coming years will be in AI and Blockchain. AI as soon as the companies dare to use it, Blockchain as soon as the companies understand what they want it for
says Fredrik Hofflander, Head of Future Technologies, AFRY
Much of today’s land and real estate operations are slackened by massive sales efforts to connect the right properties with the right clients. They have arduous due-diligence paper work, recurring follow-ups on lease agreements and cashflow management, a lack of transparency over historical ownership and land use, as well a deficiency in real property value alignment due to a lack of integrated asset data and knowledge (real-time data analysis). Moreover, as the world gets more interconnected and data-driven, the urgency for more transparent and secure transactions emerges. There are two ways of motivating efficiency, transparency and security within the land and real estate sector: one is through government regulation, top-down; the other is technology, bottom-up.
Blockchain has emerged as a go-to technology to endow asset changing ownership and transactions with more operational efficiency and transparency.
For those slightly disconnected from the distributed ledger technology (DLT) space, blockchain can be explained as an open ledger that provides an immutable trail of ownership and transaction flow. The ledger is verified by all the partaking network nodes to verify its content. Within a real estate network where assets involve large sums of money for the buyer or seller, this would allow for a legitimate source of validated data for every asset. Within this network, smart contracting would provide a pristine perspective into asset registration, lease agreements and automated payment transactions. This could include identifying obsolete contract clauses, automating payments, renewing or updating home or land ownership, among many other facilitators. In essence, smart contracts would generate new opportunities within the sector, harnessing efficiency improvements and creating real operational value.
The most valuable asset of blockchain technology is trust. Trust is a complicated feeling, but who do you trust more? A bank, a realtor, or a distributed ledger that's never been hacked before?
says Raimund Mollner, Hydro Consulting, AFRY Vienna
At AFRY, we have developed a blockchain-based tool precisely to better manage real estate and land assets through a cryptographically secure and immutable land ownership registration package.
Through our customised and flexible design of the blockchain-based tool, AFRY’s blockchain platform can track any asset and contracting.
We care about the quality of the product, but equally about the quality of the service and product integration. Partners expect robust experience and understanding on system design and integration across different sectors, which we provide through our team of experts in AFRY Digital Solutions.
We believe in the power of blockchain to sustain efficiency and value creation within the land and real estate market.
Blockchain is not the solution itself, but creates the underlying structure for effective solution development in order to keep moving forward and to prepare for an ever more interconnected horizon ahead. If you would like to know more about our scope of activity on blockchain, we are very keen to get in touch and embrace a conversation around this novel, mysterious, yet promising technology.
 Fortune Business Insights, 2019
 McGuire, 2017
 HSBC, 2017 [PDF]
 Allied Market Research, 2020
https://internationalservices.hsbc.com/ (HSBC Global Real Estate Report July2017)