This article is from the Australian Property Journal archive
THE adoption of blockchain in real estate continues to accelerate with global firm JLL pioneering the use of blockchain technology in commercial property valuation.
Currently the use of proptech has been concentrated in the residential real estate sector due to the nature of the commercial property market.
According to a report by CB Insights, there are only 53 active proptech startups globally for the commercial property market.
In a recent study, JLL said the main reason the adoption has been slower is due to the complex nature of transactions in commercial property, high transaction volumes and values are often accompanied by multi-party involvement as well as little data availability and transparency.
Furthermore, the commercial real estate industry has always been discreet about disclosing transaction data such as lease terms, rental rates, incentives offered, sale prices, financing and valuations, in order to keep a competitive advantage.
However, that is changing. In Spain, JLL has teamed up with proptech accelerator everis, to apply blockchain to commercial property appraisals, speeding up the validation process.
JLL’s CIO Southern Europe Cluster Isaac Pernas said appraisal is a complex operation that requires reliable data from all parties – and validating each report and data takes time.
“Blockchain technology means checks can be made automatically in a “chain of blocks”, with no possibility to manipulate or change data. A valuation’s strength can therefore be checked smoothly and quickly,” Pernas said.
The application also allows banks to verify the accuracy of valuation reports immediately, compared to manual processes currently used and delay validation.
JLL’s report said blockchain could improve the property search process, accelerate pre-sale due-diligence, ease leasing and subsequent property and cash flow management, and finally empower informed decision-making.
The firm said Asia Pacific could soon expand the application of blockchain technology into the commercial property sector.
Meanwhile governments across Europe are embracing blockchain and proptech.
After pulling the plug on the privatisation and proposed £1 billion sale of HM Land Registry two years ago, the United Kingdom government plans to move the land registry to blockchain by 2022.
In the wake of the UK decision, other European governments are trialling the technology and have signalled their intention to follow suit.
Their decisions pose an interesting question for groups such as First State Super, Hastings Funds Management, Macquarie and Canada’s Public Sector Pension Investment Board, who have paid billions of dollars to the NSW, Victorian and South Australian state governments for the land registry data in the past 12 months.
Will these groups resist moving the land registry to blockchain?
First State Super recently paid $2.86 billion for the Victorian Land Registry Services and last year First State Super and Hastings Fund Management bought the NSW Land and Property Information Office for $2.6 billion.
Meanwhile Macquarie Infrastructure & Real Assets and Canada’s Public Sector Pension Investment Board paid $1.6 billion for South Australia’s Lands Titles and the State Valuation Office.
Australian Property Journal
