In a bid to make the blockchain technology gain traction in Egypt’s real estate market, day three of Invest-Gate’s #DigitalWeek on July 21 explored the extent to which this digital solution is widely touted as the next technological advancement, with huge potential to disrupt the brick-and-mortar industry and its related subsectors.

Dubbed “Impact of Blockchain Technology on Property Sector,” the third panel, which was moderated by IPLUS Chairman and CEO Moataz Hassouna, delved into the multitude of technical layers, complexities, and exceptions that exist within this 21st-century digital solution. According to experts, it is capable of revolutionizing how the real estate sphere works from the inside out, notably because the sector is ripe for the transformative impact of blockchain.

The online meeting saw an in-depth presentation by Tribal Credit Co-Founder and Chief Strategy Officer Mohamed ElKasstawi on reshaping the property industry using blockchain, in addition to the contribution of Chief Information Officer (a commercial bank in Egypt) and Fintech Expert Ahmed Mansour and Badgewell CEO Ahmed El Boukhary as panelists.

At the outset, information on a blockchain, said ElKasstawi, is inherently transparent, immutable, and verifiable by all peers on the decentralized network. It offers a form of shared record-keeping that is designed to be difficult to tamper with, building resilience against the spread of corrupted material and boosting resistance to fraud.

“With minimal human error and high data accessibility, each user can have absolute confidence in the accuracy of any transaction … Well beyond delivering a single source of truth for property deals, blockchain grants the ability to transform the full lifecycle of the investment process, streamline payments and real estate transfers, tokenize property assets, and digitize deeds and titles,” the executive was quoted as saying.

One key benefit for tokenizing Egyptian real estate, in particular, is increasing market liquidity by allowing for partial ownership in property assets by multiple investors, ElKasstawi highlighted, referring to an Emirati company that sold out nearly 1,300 residential units, valued at USD 323 mn (EGP 5.16 bn), within a few minutes through blockchain.

“If this technology is adopted, Egypt can be among the so-called multiple listing service (MLS) in 10 years, which is an international-wide listing platform that provides detailed data on all homes offered for sale worldwide, through which brokers can establish contractual offers of compensation, while also accumulating and disseminating information to enable appraisals,” he further stated.

In the same vein, Mansour noted that while historically deemed a “pen and pencil” market – often relying on inefficient and archaic methods for doing business and keeping records, technology has begun to help reshape the expanding real estate industry, with blockchain, specifically, feeding into this digital transformation.

The fintech mogul suggested the implementation of an isolated “Sandbox,” which is currently used in the Egyptian banking sector, “for enabling real estate developers to put forward their proposals and requests for legal reforms, which will also serve to ease the forthwith blockchain application.”

Furthermore, Mansour pointed to the adoption of blockchain technology in the country’s real estate registration offices to boost consumer confidence. Complex legalities, however, impose some challenges for the implementation of such smart solutions, on top of the enforcement of the two key elements of safety and privacy.

Speaking of legalities, El Boukhary stressed that the impediment to blockchain adoption in Egypt is not quite technological but rather juridical, adding that the legislation should be revisited to facilitate financial transactions in the blockchain-backed real estate sector, which will consequently contribute to the development of the economy as a whole.

This technology is typically a digital ledger that offers visibility to all participants and allows for activities to automatically close using smart contracts, hence eliminate the need for third-party intermediaries. From conducting due diligence to enabling crowd-sourced investments and more, blockchain makes way for designing rental and purchase contracts, providing and evaluating the necessary data for real estate valuation, commissioning service providers along the value chain, mapping out property data, and storing sensitive information, El Boukhary explained.

“Accordingly, real estate developers can lure Egyptian expats, who deal with cryptocurrencies, to seamlessly purchase properties merely with their electronic signature and through smart contracts, which will ensure the rights of sellers and buyers alike, thereby limiting breach of contracts and determining the rights and obligations of both parties,” the CEO underlined.

When concluding, Hassouna emphasized that the emergence of such technology holds great promise for all sectors across the board. “Everything from making real estate investment decisions to choosing investment properties, blockchain can become a common practice by incorporating its wide benefits,” he summed up.

Why Consider Blockchain for Real Estate Transactions?

– Need for Common Database: Shared databases are critical for real estate transactions. One of the key examples is a multiple listing service, chich collates property-level information from private databases of brokers and agents.
– Multiple Entities Can Modify Database: Transacting and managing real estate properties involves several entities such as owners, tenants, operators, lenders, investors, and service providers, who provide, access, and modify a variety of information.
– Lack of Trust Among Entities: Many times, participants in leasing and sale transactions are new to each other and could be over-cautious in due diligence and may even have data integrity concerns. However, blockchain can help reduce the risk through digital identities and more transparent record-keeping systems for real estate titles, entitlement, liens, financing, and tenancy.
– Opportunity for Disintermediation: Trusted intermediaries such as title companies can be disintermediated through blockchain, due to increased security and transparency in title management and auto-confirmation by government land registries.
– Transaction Dependence: Many real estate transactions have conditional clauses and can be executed through smart contracts. For instance, the conclusion of a purchase-sale transaction could be dependent on loan approvals or title clearances.

Invest-Gate’s #DigitalWeek is being sponsored by Tatweer Misr as the official sponsor as well as Mountain View and KVRD as the #DigitalWeek sponsors, in addition to Nilepreneurs as the strategic partner and Nile University as the learning partner. Better yet, media partners include Cairo 360, Cairo Gossip, and Cairo Talks (Kalam El Qahira).

Tomorrow is the big day as Invest-Gate’s Real Estate Committee will wrap up the #DigitalWeek, opting to get the three-day recommendations forward and take the Egyptian property sector to its rightful course … Click here to register!