The Dubai Land Department is one of the world’s earliest governmental adopters of blockchain technology.
The term blockchain is largely synonymous with Bitcoin and Ethereum, but the technology has far-reaching applications that extend beyond cryptocurrencies. One of the industries that it will revolutionise to a massive extent is real estate, and this will benefit not just buyers and tenants, but also property managers, brokers and governments – in short, the entire real estate ecosystem.
Understanding how blockchain technology works is important to appreciating its importance and impact, so here’s a simple analogy. Imagine you’re at a party attended by 100 people, and you tell everyone that you will trade your rare limited edition watch with a friend for his Tesla Model S. Both you and your friend are in agreement, the swap happens and the deal is done. Everyone is a witness to this.
Now if one of these witnesses later says that you still own the watch and vice versa, the other 99 will refute it. If you try to sell your watch to someone else, all 100 people will confirm that your friend owns it as they had all witnessed the transaction. The crowd keeps everyone honest.
There are many ways in which blockchain technology will transform the real estate industry; however, a few of the most important ones are:
Property managers have it easy
For property managers, dealing with hundreds of owners might seem like a daunting task, but with smart contracts, they could mitigate certain risks and automate much of the tedium involved in managing property. A potential tenant’s rental history and in turn ‘tenant score’ could be tracked, time-stamped and prevented from being modified or faked, helping to reduce the risk of defaulting or troublesome tenants and importantly, as a decentralised record, does not rely on previous managers providing referrals or information to future managers.
Smart contracts apply conditional logic to a blockchain transaction. Basically, if certain contingencies are met, the smart contract executes the digital transaction. This enables real estate contracts, escrows, records such as deeds, and the distribution of money to take place without, for instance, an attorney being involved. Much like a vending machine, which does away with human intervention – you deposit some money, and voilà – a can of your favourite soda pops out.