Six in ten (61%) real estate investors expect the industry will adopt blockchain technology for transactions, a 9% increase on 2016, according to new research from BrickVest, the commercial real estate investment platform. In contrast, just 18% of investors do not expect to see the future use of blockchain technology in property transactions.
On average, investors expect to see the first property lease contracts based on blockchain technology in 2022 but one in four (25%) predicts it will happen as early as 2020.
The biggest obstacle to the introduction of blockchain, according to 62% of property investors, is a lack of knowledge and education into the benefits it brings, closely followed by the integration challenges with existing regulatory and legal frameworks (59%).
Nearly half (45%) of investors believe there is a reluctance among banks, insurers and private equity firms to invest in the technology while 41% cited the opposition by the financial gatekeepers such as notaries and trustees whose existence is threatened by blockchain.
Property investors think the most benefit to blockchain's disruptive impact will be in speeding up the process of buying and selling a property through smart contracts. Investors also expect blockchain will make transactions cheaper to execute and will reduce fraud too as all data will be stored centrally and easily accessed by the buyer and seller. Greater transparency and a larger secondary market were other benefits cited by property investors.
BrickVest believes that blockchain technology can improve the inefficient structures of financial markets. The company is making strong progress in developing a blockchain-enabled repository system and a patent has been filed. This will enhance BrickVest's systems and controls and disrupt the market's antiquated legacy systems.
Rafal Okninski, Chief Technological Officer at BrickVest, said:
"When it comes to the eventual use blockchain in property deals, most real estate investors now see it as 'when' rather than 'if'. There has been a lot of publicity about blockchain in the past two years so it's no surprise that more investors expect to see its usage but for many in the industry it remains something of a mystery how it will be successfully introduced and widely adopted given the legal and regulatory complexities.
"We believe awareness and support of blockchain as a positive force among real estate investors is rapidly growing. Once it's introduced, blockchain will revolutionise the market and bring greater transparency to what remains an opaque and old-fashioned sector."