Establishing a good title and guaranteeing speedy acquisition of real estate is of paramount importance to investors, funds, and real estate developers. For example, if salient information on prior encumbrances, easements and restrictive covenants is not easily obtainable, land ownership disputes may increase transaction risks significantly.
Uncertainty in property ownership globally may be responsible for the loss of up to US$9.3 trillion in value. This uncertainty hampers a party’s ability to lend or borrow against the property. Most of this “dead capital”, a term coined by Peruvian economist Hernando de Soto Polar, is primarily located in emerging economies. Land registries powered by blockchain technology may possibly bring this lost value into the mainstream economy, provided the information that is fed into the system is first verified and free from disputes.
Furthermore, in economies with reliable land registries, such as Singapore, the application of “smart contract” technology on a blockchain platform to automatically transfer land ownership upon certain conditions being met, could substantially enhance its real estate sector. Transactions could be carried out much more quickly with fewer intermediaries, and potentially result in more secure ownership records.
While some cities are moving quickly to adopt blockchain technology, such as Dubai (UAE) and Andhra Pradesh (India), others have adopted a wait-and-see approach. In Singapore, the financial services sector has been quick to begin testing the applications of blockchain technology – and the real estate sector may not be far behind.