Proptech innovations and blockchain in real estate

The real estate industry in Nigeria is being crafted in code, one twined around different proptech innovations and blockchain solutions. The narrative being created speaks to progress and prosperity. Like many parts of the world, the Nigerian real estate space is witnessing constant change, driven by the interaction of various technological advancements. Proptech encompasses various innovative technologies, while blockchain is focused more on the decentralized ledger system. Both solutions have surfaced as drivers with the potential for reshaping what currently obtains within the traditional norms of the industry. This article looks into the Proptech space for Innovations with blockchain ready on hand for some interesting future possibilities, with our primary focus on Nigeria and selected countries as our case study in view.

The Nigerian real estate space is one rifle with myriads of opportunities disguised as problems. With a population of over 200 million predominantly youth (average age 17.2 years), about 63 percent in multi-dimensional poverty (Nigerian Bureau of Statistics, 2022), and less than 50 percent of the over 60 m working population owning their homes, we can safely say that there will be way much more than a 20 million housing deficit. Juxtaposed with the United States, an investment in real estate is often considered the largest singular individual investment for many citizens of the US. This phenomenon is deeply rooted in the American dream of homeownership and the belief that real estate represents a stable and appreciating asset. The use of AI is also gaining significant attention in Nigeria with the political will geared in that direction through government-led initiatives. There will be continued AI applications in property valuation, leading to improved accuracy and transparency in the appraisal process.

Additionally, there are loads of advanced algorithms in more aware climes that could be leveraged to analyze the existing vast datasets to help accurately ascertain the cause of the huge gap while providing more precise property valuation numbers. AI will certainly reduce the heavy reliance on subjective assessments giving rise to more data-driven decision-making in the real estate industry. This innovation will enable a fair and data-driven property assessment, contributing to a more robust real estate ecosystem.

Noteworthy however is the Nigerian entrepreneurs, seeking to create hubs to address cross-border payments and subsequently real estate investments. It is obvious that more needs to look into those terrains to explore blockchain technologies to further streamline international transactions. It is important to mention at this point that blockchain’s decentralized nature simplifies fund transfers and ownership record transfers, easing the complexities of cross-border dealings and property transfers. This technology breeds better transparency and security, attracting global investors who are seeking a seamless and trustworthy real estate investment environment.

Moreover, predictive analytics could play a pivotal role in forecasting real estate market trends in Nigeria. By leveraging big data, smart business owners can spin up AI-driven models to analyze historical and current market data, helping investors and developers identify emerging hotspots and grandiose investment opportunities. The foregoing aids strategic decision-making, by adding to the sustainable growth of the Nigerian real estate market, while opening up entirely new conversations and possibilities.

Like many other African countries, Nigeria is faced with regulatory challenges in adopting proptech innovations. We see this in the ban and unban of cryptocurrency in repeated cycles. Blockchain, in particular, introduces new legal considerations that have yet to be harnessed within the Nigerian space. Stakeholders must continue to actively engage with regulators to establish frameworks that ensure compliance without stifling technological advancements. Striking a balance between innovation and regulation is crucial to fostering a conducive environment for the growth of proptech in Nigeria. A regulatory environment perceived as burdensome or inefficient can erode public trust in government institutions. We can also consider compliance with numerous and complex regulations often requiring businesses to allocate significant resources to legal and administrative matters some of which are insensitive to the reality that befalls users of those spaces.

That said, Sweden has leveraged the implementation of blockchain within its countrywide land registry system. The Swedish Land Registry collaborated with blockchain startup ChromaWay to create a proof-of-concept for a blockchain-powered land registry. The project focuses on cutting down on the process of registering property transactions, lowering the possibilities of fraud while improving the overall efficiency of the land registration system. One advantage of the afore Public Private Partnership model is the easy infusion of blockchain into the land registry system, which can considerably lower the time and costs associated with property transactions. It will also improve the overall security and transparency of the land registry, providing a tamper-proof and difficult-to-alter record of property ownership within the country.
Besides, crowdsourced real estate investment platforms are fast growing in awareness in Nigeria, allowing different individuals to collectively invest in properties that appeal to their risk appetite. These platforms democratize access to real estate investments, enabling a broader segment of the population to participate in shared property ownership. This trend aligns with Nigeria’s goal of fostering inclusive economic growth through technology-driven financial instruments. RealtyShares was a prominent real estate crowdfunding platform in the U.S. It allowed investors to take an active part in a variety of real estate projects, including residential and commercial properties. The company successfully facilitated crowdfunding for numerous real estate projects, offering investors the unique opportunity to diversify their portfolios. However, it is essential to note that RealtyShares ceased operations in 2018, indicating the dynamic nature of the real estate crowdfunding industry. This calls for some refining for entrepreneurs who would tow similar paths to forestall any future issues.

At this juncture, it is necessary to mention that the Nigerian real estate landscape needs to start tilting towards energy-efficient building technologies. Sustainable construction materials and designs need to become integral to new developments. This will align with global environmental goals while addressing local concerns about energy conservation and resilience. Germany, in particular, is famous for its commitment to sustainable building practices. The Passivhaus standard, originating in Germany, focuses on the creation of ultra-energy-efficient buildings with minimal energy consumption for heating and cooling. The Bahnstadt district in Heidelberg is a good case for further investigation. It aggregates energy-efficient buildings, renewable energy sources, and smart infrastructure. The Bahnstadt project showcases the German dedication to sustained urban development.
Additionally, smart home technologies need to be largely embraced to improve the quality of value delivery in Nigerian properties. IoT devices boost our chances of achieving security, energy management, and home automation as standard features. These technologies will provide residents convenience, security, and energy efficiency, deepening the modernization of the real estate sector in Nigeria. South Korea embraced smart home technologies as a critical part of its broader strategy toward a connected and technologically advanced society. The government actively supported the private sector in the development of smart home solutions. A case worthy of mention is the Songdo International Business District in Incheon. The smart city project incorporates advanced technologies that include smart home features. It allows residents to control various aspects of their homes through integrated systems, which contribute to energy efficiency and sustainability on a broader scale.

Lastly, looking ahead, the future of proptech in Nigeria holds several exciting prospects. The convergence of AI, blockchain, and IoT will likely lead to more integrated and intelligent real estate ecosystems, however, Nigeria must first solve the master problem of incessant power outages. Also, given Nigeria’s unique market dynamics, future proptech innovations could be tailored to address specific challenges, such as informal land tenure systems and the need for functional and affordable housing. The U.S. has witnessed widespread adoption of smart home technologies. Several tech companies provide smart home devices and platforms, and there is a growing trend toward the integration of these technologies into new construction and existing homes.

In conclusion, the Nigerian real estate sector, supported by the government, should embrace proptech innovations to drive growth, transparency, and inclusivity. As the industry navigates regulatory considerations, the synergies between AI, blockchain, and other technologies offer opportunities for consistent change. The future of proptech in Nigeria holds the promise of a more efficient, accessible, and sustainable real estate landscape. We must all play our part to see these laudable desires become a reality.

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