Maharashtra has started property e-registrations and the State is reportedly all set to also introduce blockchain. What is Blockchain? It is a technology by which users can keep a historic ledger of every transaction that has happened in the past for any asset be it a crypto currency or a piece of real estate like land or building. Track2realty analyses whether blockchain would be the future of real estate transactions.
With Blockchain traceability of past transaction records is greatly enhanced and a report by Deloitte says that blockchain could soon change how real estate transactions work. With virtual tours, direct communication between the buyer and the owner, and a complete paperwork guide, parties can avoid intermediaries.
Blockchain is also useful in cases where the number of transactions is low but the requirement for traceability is high and goes back several years, as in the case of real estate. A block chain ID for every land parcel in the country, for instance, could highly reduce the time required for due diligence when land is bought or sold. The technology could also create a system of real estate tokenisation which will pave the way for fractionalisation of real estate.
However, for these ideas to be reliable and trustworthy, the market has to understand and accept it as it is the creation of any new market. Hence, much volatility may be expected in the next few decades. There are naturally many questions today in the public domain:
How could Blockchain change the real estate?
Is Blockchain the future of real estate and does it have the potential to make the transactions more transparent?
What should be the ideal blueprint to make the transition from digital property registration to blockchain?
Is Blockchain really fraud proof?
Decoding Blockchain
The real estate sector has been functioning conventionally for years with several processes, sales, and government details managed by local government offices, traders, brokers and other parties involved in the deal. It was a tedious procedure that took time and kept many potential investors away.
Blockchain technology, on the contrary, provides a solution for observing, recording, and conducting developments on a single online platform that connects various buyers and sellers. The tiresome task will function smoothly and effectively streamlining all the real estate processes for the future.
Blockchain stores the data in the form of blocks while ensuring end-to-end encryption, clearness, and delegation. It is difficult to update, modify or tamper with the data once it is stored in the blockchain. It shows the flawless and unaltered data to the permissible members, without any interference from the unrecognized entity within the deal.
This takes transparency to another level for the sector which has historically been known for its traditional and complex working style. This way of asset management can encourage foreign and smaller investors who are used to a professional and faster style of working.
Industry acceptance
Tushar Shrivastava, Co-founder & CTO, PropertyPistol.com agrees that blockchain technology is a great way of keeping records, simplifying transactions, and tracing products and services in a business. Blockchain is ideal for businesses that run on data. It is a shared unchallengeable ledger that provides immediate and absolute transparent information to permitted access members. All the vital procedures of sales, registrations, payments, accounts, and projects are saved in one window with all the details of the transactions.
“With the shared data, the procedure is recorded only once thus avoiding duplicity. This will ensure work efficiency and accuracy without the chance of error. Real estate is a business that needs a huge amount of data storing and sharing by members that many times regular data storing software are not able to fulfil appropriately. The developer, seller, investors, and property consultants who are handling complicated data can get compact and easily accessible information in the single software thus avoiding any confusion. In a sector that needs access to massive information at a particular time, the details can be processed in a minute without any hassles. The access by lesser and permissioned members will keep repeated data out,” says Shrivastava.
Aditya Kushwaha, CEO and Director Axis Ecorp points out that till now ownership of property was determined by a Government Property Registrar Office, as per written laws and regulations. This may get replaced by the modern and digital age. A blockchain ecosystem efficiently offers ownership rights, eliminating paperwork, bureaucracy, and expense while ensuring openness. These are tenets that everyone can firmly and calmly accept.
“Under the new system data once stored cannot be changed, eliminating risks of impersonation and unauthorised tweaking of records. Each property holder must be given a property card, which can be accessed through a PIN. The property transaction details can be accessed only with the authentication of the user’s digital key or PIN number. From a user’s point of view, this system protects property data besides removing the hassle of storing hard copies of documents. A user will be able to swipe the card at citizen service centres and download or print the same,” says Kushwaha.
Vinit Dungarwal, Director at AMs Project Consultants says the real estate market is being transformed by blockchain technology as it will make future transactions safer, more transparent, and more efficient. A blockchain transaction is extremely safe since it is validated by a network of computers. Transactions on the blockchain are transparent and cannot be altered. Overall, blockchain technology has the ability to significantly streamline and simplify the real estate transaction process and may also aid in enhancing security and decreasing instances of fraud.
“Blockchain technology produces a transparent and immutable/unalterable information chain. These features could present an opportunity for intellectual property (IP) offices to alter the registration of IP rights by making the process more cost-effective, expedient, accurate, and secure. In addition, the technology could present an opportunity to improve the efficacy and visibility of rights management data. The ideal and the most effective way to transition would be to integrate blockchain with existing property registries,” says Dungarwal.
With Maharashtra’s intent, Blockchain technology has been gradually gaining ground in the Indian real estate market. It may take a sufficient amount of time before making the transition to blockchain. In a densely populated country like India, digital property registration is still restricted to metros and Tier II cities. Many villages in India started using computers in the late 2000 and hence digital usage has been slowly initiated in these places. Starting on an experimental basis in a few registration offices, it can increasingly be inducted into the rest of the country after checking its success rates and popularity among the involved entities.
Digital property registration in India was itself an achievement avoiding loads of physical documents. Blockchain would be a pioneering technology in Indian real estate that will preserve huge amounts of data without the chance of getting corrupt or damaged for investors. This will benefit institutional, smaller investors, fractional owners, NRIs, foreign companies looking to invest in India, and Real Investment Trusts of India (REITs) stakeholders, who are looking to simplify the whole process and ready to welcome the compressed data that blockchain technology allows to store.
Ravi Sinha
#RaviTrack2Media
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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