Singapore’s Suntec City building is setting itself up as a hub of blockchain players with several companies setting up shop in a 1,336sq feet co-working space. A similar project is being launched in Tokyo.
“Blockchain technology offers a means to improve transparency,” says Christopher Clausen, Associate Director of Asia Pacific Research at JLL. “There’s plenty of potential for use across industries, and real estate is another big area for blockchain application as investors are demanding, and expecting, ever-greater levels of transparency.”
In its simplest form, Blockchain is a distributed database. By recording and combining transactions into a de-centralized ledger system, it creates a “chain” of chronological data that no one party has control of. The value lies in the system’s ability to authenticate and track transactions in real time without the use of a third party, such as a bank.
Corporates are also taking note. HSBC Australia joined forces with start-up Moneycatcha last year to use its end-to-end blockchain-enabled platform for approving home loans automatically.
“A blockchain based registry would make it easier for existing owners to market their assets for sale while potential investors would find it easier to identify assets consistent with their investment strategy,” Clausen says.
Blockchain bodes well for Asia Pacific’s bustling Proptech scene, where China and India are leading the way in fundraising, at US$2 billion and US$1.7 billion, respectively, according to JLL’s Proptech report.
“Blockchain offers a new approach to asset securitization and ownership and holds the potential to reduce market liquidity risk,” explains Clausen. “The key is really improving liquidity and enabling investors to more easily acquire and dispose of assets.”
While there is huge potential for blockchain start-ups in the real estate industry, companies will nevertheless require support from the governments in the countries that they operate. Start-ups who experience rigid governmental regulations towards their new business models will face the greatest challenges.
So which country has the edge? Here’s a closer look at the most promising Blockchain and Proptech developments around the region.
Despite regulating its financial markets tightly with a ban on initial coin offerings, China is still encouraging firms to research blockchain, considering it “a good technology.”China-based i-house.com , a real estate blockchain cloud platform, secured US$30 million in January for its seeding round. The start-up’s investors include Draper Venture, the largest venture capital fund in the blockchain sector.
Blockchain platform developer Ruizhuoxitou announced a deal in February with China-based NYSE-listed company Xinyuan Real Estate. Ruizhuoxitou provides blockchain-based services such as asset digitisation, rights verification and information authentication. Their blockchain platform had previously been applied in the financial services and insurance industries.
India has the largest number of proptech start-ups with 77 of 179 funded in Asia. But many are still in the seed and angel-funding stages. In 2016, India’s blockchain start-ups received US$1.7 billion in funding. India’s government is also collaborating with corporates to further blockchain’s development within the country.
The Bengaluru-based start-up PropertyShare and the Pune-based competitor RealX both provide blockchain platforms that allow buyers to purchase fractional ownership of real estate. PropertyShare claims to manage US$11 million in commercial assets with a portfolio of 20 properties across four cities in India. Backed by Japan's Asuka, Pravega Ventures and the Singapore-based Beenext, PropertyShare is eyeing expansion into overseas markets in 2018.
Japan is another leader in blockchain. The country legalized Bitcoin and is considered the most advanced country in the crypto field globally.Bitproperty is the major player. Started in Japan, the blockchain driven platform that uses “tokens” for real estate investments is now expanding globally. It recently partnered with two companies to strengthen its offering. Nikken Housing, a Japanese real estate development company to make some of its projects available to Bitproperty investors. And Alphabit, a digital currency fund.
Singaporean start-ups are also adopting blockchain to tokenize property. FundPlace and Reidao are both using the platforms to create tokens backed by real estate that investors can buy. FundPlaces announced in January 2018 that it had raised US$1.5 million from a Singapore-based investor and has completed several proof of concept transactions in Singapore and New Zealand using their platform.
Australia’s scene is heating up. Besides the HSBC-Moneycatcha tie-up, there are the likes of Propify, a start-up behind the first real estate Blockchain platform to securely market property via social media and search engines.
The country is also ahead of the game in terms of digitalising property ownership. Many point to the success of Property Exchange Australia Ltd (PEXA), a three-year-old company digitalizing the process of land ownership valued at A$800 million and growing fast, which demonstrates an industry ripe for blockchain-based solutions.