In today’s hyper-connected world, secrets are the last thing any potential investors want to be kept from them, yet the Commercial Real Estate (CRE) industry seems to thrive in shrouding critical aspects of its operation in secrecy.
Operations such as lease and rental rates, prices and valuation of properties for comparable and competitive analysis remains out of the reach of investors, making the industry one which every claim is always taken with a pinch of salt. The problem with all the salt-pinching, it doesn’t take much to turn even the best prospects into a very salty one.
In recent times, several companies have started pushing for greater transparency and availability of information to both investors and the general public. However, this information is often published after the fact, scattered across heterogeneous systems that remain inaccessible to most leading to inefficiencies, inaccuracies, and back to the same opacity concerns they intended solving.
While it may look as if these efforts are deliberately timid attempts in order to quiet the rising calls for transparency while preserving the industry’s “status quo”, the fact is the industry had no tools for gathering and presenting the disparate information involved in CRE transactions. Until now.
Why Till Now?
A survey conducted by the World Economic Forum in 2015 among 800 executives and ICT experts discovered that 57.9% strongly believed that by 2025, 10% of all global GDP information will be stored on a digitized, immutable, and decentralized ledger system – the blockchain.
The blockchain is making it possible to harmonize and coordinate financial information and transactions in real-time without mediation. Its ability to transcend all forms of centralized control is ushering in a future of financial transactions un-imagined before.
The permanence of information stored on the blockchain, ability to withstand any attempt to tamper with recorded information, elimination of intermediaries and attendant cost of mediation is the panacea for the inefficiencies and inaccuracies festooning the CRE industry.
Blockchain technology has immense potentials, especially when paired with BigData and AI. The technology stands to play a bigger role in CRE by linking basic CRE operations such as purchase, sale, financing, leasing, and management with utility services for data-driven city management – the often talked about smart city. However, it’s one thing to slap the blockchain on an industry, it’s another to adapt it to suit the industry’s unique needs and challenges. This is the task Elements Estates has undertaken, adapting the technology to suit the growing needs of one of the most exciting aspects of real estate – distressed assets.
The Financial Crisis of 2007
The financial crisis of 2007 has left banks with more distressed assets than they know what to do with. In a bid to maintain liquidity, these assets often wound up on the market at prices well below their market valuation, giving investors an almost immediate ROI from just acquiring the property alone.
However, the opacity of this market makes it nearly impossible for all but a selected few to participate in it. Elements Estates is leveraging the blockchain to overcome this status quo, bringing interoperability, transparency, and accessibility between various stakeholders in the CRE industry.
And this is just the beginning, it is just a matter of time when national systems will be fully digitized and put on the blockchain for example. When this happens, companies like Elements Estates will evolve into a next phase of operating. A phase with endless opportunities like integrating Internet of Things (IoT), automatic transfers of ownerships etc. The Real Estate sector will face its biggest revolution known to man.