Global adoption of blockchain technology has already transformed many industries and demonstrated that the rolling tech revolution is irreversible. Yet, despite Nigeria having the highest rate of cryptocurrency ownership globally at 24.2%, most real estate developers and their clients in Nigeria still have a vague understanding of cost-effective and insecurity-proof solutions that blockchain adoption in real estate provides.
In this article, international real estate developer and Executive Director of Uraga Real Estate – Moyo Ogunseinde, shares 5 key features of blockchain technology that herald positive shifts for the real estate industry.
1. Intermediaries & RE Platforms
According to Ogunseinde, blockchain technology reduces the number of intermediaries involved in negotiation processes and deal closure. There are special one-stop-shop real estate platforms that allow conducting more secure and prompt transactions through end-to-end encryption. And with blockchain technology, one can find a property that can be digitised, verified and directly sold or bought on the platform without numerous middlemen.
2. Fractional Ownership
Blockchain enhances the practice of fractional ownership in real estate. Through blockchain, investors can access a peer-to-peer platform to buy and sell fractions of tokenised properties as they see a good deal. Tokenisation, therefore, gives an opportunity to securely make deals with shares of one real estate asset. According to Ogunseinde, there are already different forms of fractional ownership offerings in the market, but information about its availability is closed to a handful of people. she added that with real estate timeshare offerings and ownership of certain square metres of space inbuilt facilities, the opportunities for more investors in real estate to democratise wealth creation is endless using blockchain technology. “It’s imperative to add that the ecosystem to protect the consumers should also be created as various entrants come into the market,” she said.
“Real estate investment is highly illiquid. However, if tokenised through blockchain, properties can be easily traded,” Ogunseinde told Business Insider Africa. Tokenisation unlocks real estate liquidity by standardising property titles and records, as well as increasing the speed of transactions which helps avoid loss of value.
Another point Ogunseinde gave is that blockchain ensures the security of deals through end-to-end encryption. According to her, the information conveyed with blockchain technology is accessible to all peers in the network, making data transparent and immutable. Since information can be verifiable by peers, buyers and sellers can be more confident in conducting transactions. Fraud attempts can be lessened, and land titles – easily verified. Land title verification is particularly important, given the current cumbersome and corruptible system currently in place. Ogunseinde also added that, with an interface that codifies all land titles, the process of perfecting and transferring titles becomes easier. “Of course, it immediately takes out Omo’nile (Native landowners) challenges in land transactions.
5. Land and Property Registration
Land titles currently rely on paper documentation which is vulnerable to data loss and mismanagement, while the process of property transfers and permits are excessively bureaucratic. According to Ogunseinde, blockchain digitises paper deals and helps track changes in an immutable ledger that acts as a reliable and privately shared repository of assets for peers. She said, “It enables transactions and property ownership records to be more accessible by facilitating market transactions, increasing investor confidence, unlocking access to finance, and promoting economic and social community development.” She added that in this capacity, the technology helps to reduce the rate of criminal activities in the industry.
Ogunseinde concluded that the Registers of the land titles in state and federal government must begin to understand and collaborate with stakeholders of the industry on embracing blockchain technology that will ultimately benefit all. She added that it is critical to coordinate actions towards stakeholder enlightenment, educating relevant parties on the incredible possibilities of fully deploying tech in Nigeria’s real estate sector.