- A group of real estate professionals and new technologies have simulated the first real estate transaction of a significant building using Blockchain technology, an important step in the digitization of the sector.
- The group has chosen to “replay” the recent sale of the building IN / OUT SFL Primonial REIM, one of the largest transactions in 2017.
- The initiative was to identify, in the process of purchase / sale, the steps that could be facilitated and secured, then translate to a business application to make the connection with the Blockchain Ethereum.
The sale of an iconic building is reproduced on-chain
The initiative, launched by the startup Olarchy in January 2018, aims to improve the fluidity, transparency and reliability of a real estate transaction, using the Blockchain technology. It was attended by SFL and Primonial REIM (two major French investors), Oudot & Associés (notary), the law firm Osborne Clarke (very active in the digital economy), HBS-Research (specialist of Real Estate data) and Blockchain Partner (specialist of blockchain processing).
The goal: convert an entire real estate transaction into a Blockchain format and reproduce the sale process as if it was entirely on Blockchain. To serve as a major test for this world first, the group has chosen the sale of the In/Out building (35,000 sqm in Boulogne-Billancourt (France), occupied by the OECD campus) by SFL to Primonial REIM last October.
“The challenge for us was to bring to the table the right partners. The bulk of the work was then to precisely describe all the stages of a complex real estate transaction like In/Out, then develop an IT application that creates a link between the classical mechanism of the transaction and its translation on Blockchain. ” explains Michael Sigda, leader of the initiative.
The deployment of a Blockchain Ethereum
“Most of this demonstration is to record main milestones of the deal and the evidence of the related documents in a smart-contract. This smart-contract was deployed on public Blockchain Ethereum, which relies on a network of more than 15,000 nodes which robustness and security has been proven. This is of course a first step towards a more comprehensive decentralized application. ” said Antoine Yeretzian, cofounder of Blockchain Partner who oversaw the IT development.
“We wanted to better understand what the Blockchain could bring in term of time and safety gains, while retaining the essential qualities of confidentiality and flexibility in the management of the transaction. For SFL, which promotes innovation in real estate and its applications, this experiment is a good way to project ourselves into the changes that digital technologies will undoubtedly bring to our business, and it was important to do it with all stakeholders, including notaries. “Summarizes Aude Grant, Deputy Managing Director Asset Management and Investment of SFL seller in / out.
“The Blockchain technology will necessarily speed up the digitization of trade in real estate as in other sectors. It does not replace existing tools and processes but will provide an application that enhances security and transparency of the transaction process. The notary naturally finds its place in this process that secures the origin and integrity of data exchanged, “says Anne-Hélène Garnier, from Oudot & Associés.
The Blockchain creating value for real estate
“We have demonstrated that this tool can remove some of the information asymmetry and offer guarantees of integrity and traceability, including the documents exchanged during transactions or data room. Be sure that we all speak of the same document, hold an unassailable proof deal of history, are two elements that we felt immediately very interesting. The gain associated time seems higher than 20%. “explains Robin Schreder, who oversaw the acquisition at Primonial REIM.
Obviously, this experiment respects GDPR regulation, entered into force on the 25th of May 2018. “The Blockchain processes implemented and developed as part of this initiative are as secure as possible. The encryption process preserves all the falsifications and all possible hacks.” added Xavier Pican, lawyer at Osborne Clarke, a specialist in data, technology and intellectual property.
“New technologies including big data, Artificial Intelligence and Blockchain will be tremendous challenges for the real estate sector. We have always been motivated to remain as close as possible to operations to bring the right information to professionals. We are delighted to participate in this initiative that represents new ways for the benefit of a reliable and certified data.” said Blaise Heurteux, President of HBS-Research.
World first demonstration at MIPIM Proptech on June 20th 2018
The initiative and its demonstrator will be presented at MIPIM Proptech on June 20th by Olarchy. “We wanted to prove with these partners that real estate is a sector in which the Blockchain will have its place and will create value. Our roadmap is to explore different cases of applications before starting the development of turnkey solutions for 2019. In such an intermediated sector, with such volumes of trade (construction, purchase / sale, rental, management, enhancement, etc ..) and the profusion of contracts (leases, sales, works, contracts for Facility Managers, Property Managers, Asset Managers, etc…), the scope of the Blockchain is limitless. Where there will be contractual relationship, there will Blockchain; Olarchy and has the ambition to develop a platform that will be at the center of the game.” Concluded Cyrille Berthet, co-leader of the initiative.
Among these applications, three main areas are already being addressed: further improvement of the transaction process (including financial components), simplification of the valuation process, enhancement of the relationship between landlords and tenants.