In the real estate industry, blockchain technology is beginning to be applied to areas such as registration, transactions, securitization, and tenant management. Transaction cost reduction, tamper-proof data management, and small-lot securitization — let's explore the latest trends of this technology that has the potential to fundamentally transform the industry structure.
What Is Blockchain? Its Connection to the Real Estate Industry
Blockchain is a system for recording and sharing transaction data on a distributed network. Even without a central administrator, nodes worldwide share and verify data, making tampering extremely difficult. While it has been implemented ahead in financial institutions and cryptocurrencies, the real estate industry, which involves high-value rights transfers, is particularly evaluated as having high compatibility.
What Challenges Does the Real Estate Industry Face and What Can Blockchain Solve?
Challenge ①: High Transaction Costs and Opaque Information
Traditional real estate transactions involve many costs including rights certification, registration applications, third-party brokerage, and property information confirmation. By disclosing and sharing data on blockchain, these costs can be significantly reduced. Tampering risks are also eliminated, improving reliability for both buyers and sellers.
Challenge ②: Difficulty in Small-Lot Real Estate Investment
Security Token Offerings (STOs) for securitization are attracting attention as a mechanism that allows more investors to participate in high-value real estate. Tokenization enables small-lot ownership transfers while reducing organizational operation costs.
3 Real-Life Examples of Real Estate × Blockchain
LIFULL Case: Security Token Proof-of-Concept Experiment for Vacant House Utilization
LIFULL, which operates a real estate information site, conducted a proof-of-concept experiment using smart contracts on blockchain to automatically execute distribution, dividends, and redemption of security tokens. It realized transparency allowing investors and third parties to check the flow of funds and tokens in real time.
ZWEISPACE JAPAN Case: World's First Blockchain-Compatible Real Estate Portal
Built the world's first blockchain-compatible real estate portal site and obtained patents. Services such as robot architects, appraisers, and earthquake resistance diagnosis are deployed on both general user and business-facing sites.
Sekisui House Case: Connecting Housing-Related Companies via Blockchain
By linking housing-related companies such as telecommunications, gas, and insurance via blockchain, sharing identity verification information on blockchain aims for one-stop rental contract processing. If realized, the cost of moving and various contracts would be significantly reduced.
For the latest trends in real estate technology, also see AI Real Estate Appraisal: How to Find Your Property's Fair Price.
FAQ
Q1. Will blockchain make real estate registration possible?
It is technically possible, and proof-of-concept experiments are progressing in some countries. Deliberations have begun at related agencies including the Ministry of Justice in Japan as well, but full implementation requires legal framework development.
Q2. Can you purchase real estate with security tokens?
In Japan, STOs are recognized under the Financial Instruments and Exchange Act framework, and some real estate STO products have begun circulating. The small-lot minimum investment amounts are a major difference from traditional real estate investment.
Q3. What is a smart contract?
A smart contract is a program recorded on blockchain that automatically executes contracts when conditions are met. Applications such as automatic rent transfers and automated cancellation processing are progressing.
Q4. Isn't blockchain incompatible with personal information protection?
With public chains, all data is disclosed, but using private chains or permissioned chains allows designs where only necessary parties can access information.
Q5. Are there benefits for small real estate companies to implement blockchain?
Direct implementation is difficult, but benefits can be received indirectly by utilizing blockchain-compatible real estate portals and management platforms. Not falling behind the industry-wide digitalization is the key to maintaining competitiveness.
