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The Commonwealth Bank has been chosen by the World Bank to deliver the world’s first blockchain bond. And the Australian Stock Exchange’s new settlements and clearing system will be the first ever large-scale application of blockchain in critical financial infrastructure globally.
Charter Hall’s Chief Technology Officer Aidan Coleman says blockchain is expected to have a major impact on the real estate industry, and Charter Hall is involved in several projects to ensure it stays ahead of the game:
“I think blockchain will disrupt many of the touchpoints and relationships we have with different players. Thinking about it in terms of how it could drive increased efficiency within your own organisation is really just a drop in the ocean".
There are a huge amount of use cases around how blockchain could bring more transparency, more efficiency to the way organisations interact with each other in the real estate industry – be it landlords, tenants, valuers, law firms or facility managers.
Blockchain has already made major inroads into the property sector in other countries. Dubai’s government was the first to announce it is moving its entire land registry onto a blockchain database, and others including Britain are considering following suit.
Apart from management of property titles and rights, the technology has the potential to streamline many other real estate-related processes – from property maintenance to funds management and urban planning.
In Australia, blockchain has already been proven as a way to digitise the guarantee process used for commercial property leasing.
Australian start-up Power Ledger is a blockchain-based platform that allows owners of solar panels and batteries to conduct peer-to-peer trading in energy.
The Australian National Blockchain is a project backed by the CSIRO’s Data61 that will be open for use by all Australian businesses and offer ‘smart contracts’ that can be triggered by sources such as IoT sensors.
An example given by Data61 is a sensor at a construction site that could automatically authorise a bank to release payment after a delivery of materials.
Charter Hall is currently part of a working group of several organisations, including CoreLogic, designed to examine how blockchain could reshape processes around property data and analytics such as valuations.
Coleman says Charter Hall is also collaborating with Australian start-up Estate Baron to investigate how blockchain could improve the customer experience for investors in Charter Hall’s property funds.
Estate Baron is a property crowdfunding platform that is developing a blockchain-based fractional property marketplace called Konkrete:
“As part of our ongoing discussions with Estate Baron we are relooking at the concept of the unit registry,’’ says Coleman. “At the moment, when shares or units are bought or sold, everyone maintains their own version of the unit registry that needs to be constantly updated. But if we were to move to a system enabled by blockchain, you could have completely synchronised registries through this distributed ledger technology, allowing a lot more transparency and speed.’’
Blockchain-based registries would also enable the creation of secondary markets, creating unprecedented liquidity for property investors.
“It would mean a marketplace where security-holders can deal directly with each other instead of through us, which at the moment is not possible through the structures we operate. That would game-changing. It's something that our customers have often talked to us about".
Another area where blockchain registries would have a big impact is in facilitating foreign investment in Australian commercial real estate. The processes by which high-net-worth investors invest into Australia are currently onerous, which limits participation levels despite strong demand.
Coleman says, “It’s quite an expensive process, there is a lot of regulation and red tape. What we are seeking to do is to build the capabilities and the platforms for us to be able to provide a more frictionless experience for foreign investors in our funds and our products. I think we are going to see a lot of focus on how funds management businesses, real estate businesses, can utilise technology like blockchain to gain more of a foothold into equity raising globally, particularly in Asia".
Coleman says advances in technology are happening so rapidly that it is difficult to predict their full effects, but Charter Hall will stay at the forefront of developments to meet new challenges and capitalise on new opportunities.
“The scale and speed of technology coming at us is unprecedented, so innovation is not an option. But we have much to be proud of as an industry, and in several areas what we are doing in Australia is as well as, if not better than, than the rest of the world.’’