In the MENA region, these benefits will be magnified due to the acceptance of innovation, governments’ generally positive view to using blockchain and relative youth of the market. Governments and real estate companies in the region can look forward to automated paperless processes, lightning fast financial transactions, new business models that open new markets and safer working environments. All in all, blockchain will impact many areas within real estate in the MENA region.
How has blockchain taken off in the region and the world?
There are currently thousands of projects ongoing globally that are using the power of the blockchain to create a trustable digital environment. Everything from supply chain to training to equipment finance and charity donations are getting the blockchain treatment. These projects are being carried out by companies, governments and NGOs. The potential benefits cover such vast areas of activity that almost every industry is taking notice.
In the real estate industry, projects have covered subjects such as digitizing the land registry, automating property purchases, reducing cost or risk in the construction supply chain and asset management. Most of these projects globally are still at the pilot or proof of concept phase. However, many projects are in full production, such as the Swedish Land Registry, which conducted its first blockchain transaction last month after two years of testing.
In the region, the obvious standout is Dubai, which has staked its entire government efficiency drive on moving all processes and documents to the blockchain. Included among these will be the Dubai Land Registry and the ongoing rationalisation of government internal payments ledger. Other Dubai government initiatives will also impact real estate, such as those in energy management and NOC approvals. As with the global picture, many projects locally are at the pilot stage but innovation is taking root. Several startups are looking at innovative ways to leverage the technology in areas such as parking, asset management and real estate sales. Likewise, most large developers are including blockchain in their innovation thinking. So, the technology is at an early stage in MENA, but activities are happening in many areas of the real estate and annexed industries.
What is the disruptive potential of blockchain technology in a region like the GCC?
Blockchain is set to disrupt a whole host of industries and real estate will not be immune. To make a simple example, taking blockchain to its ultimate potential, all paper will be eliminated from processes involving NOCs through the use of blockchain based identity and permanent digital ledger. Therefore, intermediaries and processors will be disrupted. Another example is that of escrow, blockchain can disrupt certain processes needed today to ensure a trustful transaction, disrupting the costs of escrow. These disruptions, however, are positive, in the sense that they are taking out cost for necessary processes and speeding them up, while allowing resources to be deployed to other overloaded areas. Further disruptions may occur in the currencies accepted for purchase, supply chain efficiencies and security.
Blockchain technology is not a new concept – why are we only hearing of it now?
Blockchain is indeed a technology that has evolved for the last decade and comes from the assembly of much older technologies. However, as with all technologies, it takes time to create and then prove robust systems, disseminate understanding of the benefits and implement alongside legacy systems. So, it is logical that a few years have passed. Undoubtedly also, the recent gyrations of the most well-known blockchain use case, cryptocurrencies such as Bitcoin, has made this phenomenon visible to many.
Do you see blockchain technology continuing to advance in the future in the MENA region? If so, how?
The answer is self-evidently yes if you just consider the drive for regional governments to move away from paper based systems to digital, which itself has been ongoing for a decade. Why, after ten years of web and mobile services do we still need paper when applying for certain service? Simply there has been no simple way to create a permanent digital document till now and blockchain provides that. Once we have that, interfacing between systems becomes easier. Likewise, in the real estate industry, just look at the mass of paperwork in the supply chain of construction and sales process. This industry is a rich environment of possibilities to leverage blockchain and the region is already showing itself to be a prime mover globally.