The real estate blockchain boom in Russia began a few years ago as numerous big development companies began experimenting with the technology to improve and streamline processes.
Rosreestr (The Federal Service for State Registration, Cadastre, and Cartography) has now become the first company to register transactions using the blockchain in Russia.
Nowadays, blockchain technology is actively implemented in all business sectors in some shape or form. So let’s take a look at how it helps improve the real estate sector in Russia.
Rosreestr’s pilot project
Russia’s state-owned real estate firm Rosseestr recently launched a collective blockchain project for registering equity participation agreements using smart contracts.
The project allows documents submitted for state registration by applicants to be registered automatically without any human intervention, minimalising errors and boosting transparency and speed.
Equity agreements can also be registered through the blockchain thanks to the new project.
The main goal of Rosreestr’s blockchain project is to streamline and optimise processes and protect and increase data security.
Blockchain technology helps increase the level of data security thanks to its immutability and inherent decentralisation. It can also help optimise information control and provides added transparency and accessibility to all participants in the process.
The Russian real estate sector hopes that with the help of blockchain, there will be more transparency in regards to the investment processes for new construction projects.
Blockchain could provide protection from the most common fraud schemes and eliminate the risk of corruption and illegal changes.
With Rosreestr’s project, due to the sharp increase in the automation of work processes, the time required for processing transactions may decrease from 15 days to just one day.
What will change with blockchain?
Blockchain technology should help Russia’s real estate sector become safer. Historically, real estate operations in the country have been very risky. A market of con-artist realtors has sprung up in Russia with the aim to defraud victims by falsely “selling” property that’s not for sale.
The victims of scammers are often elderly people, drug addicts, and people with disabilities. With the help of blockchain, fraudulent actions will be impossible as the technology is transparent and immutable.
Intermediaries in real estate transactions will no longer be needed and contracts can be concluded much quicker, meaning there is less scope for corruption.
Russia was not the first to decide on introducing blockchain technology into the real estate sector. In a number of countries around the world, experiments are already underway to transfer state real estate registers to the blockchain.
A good example is Japan, which is looking to utilise the technology after an earthquake caused a building to collapse in which archives of property rights records were stored. It took years to recover the data. Blockchain will be able to protect data from such cases.
Currently, many related services are involved in the real estate sector: lawyers, banks, development companies, agents, government services, and so on.
With such a large bureaucratic system in place, errors in drawing up contracts for the sale of real estate are inevitable.
With the help of blockchain technology, the costs associated with these errors will be reduced, and the purchase of a new house will become a pleasant and safe transaction.
The Russian real estate market has high hopes for blockchain technology.
Rosreestr’s project will help reduce the amount of paper workflows, and processes that previously took days and weeks will now take minutes, meaning the quality of service will improve.
The probability of error will be minimal, and the impossibility of falsifying transactions will ensure security from the activities of fraudsters and other scammers.
With so much potential, real estate businesses sincerely believe that the blockchain revolution will change the sector for the better.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.