For some years now there has been talk of blockchain-based property transactions. Everyone from the UK, to Sweden, to Australia has explored the idea, but a new project in Hong Kong, underpinned by the Bank of China, looks to be the first to really aim to do this at scale and bring this tech to the wider public.
This matters for several reasons: first, as noted, talk about blockchain-based property projects is frequently just that – talk, and pilots don’t seem to lead to broad use by the general public; second, Hong Kong is one of the most vibrant property markets on the planet, so if this new application, called ‘PropTech’, takes off it could be the first evidence of people really using blockchain tech at scale that is not related to crypto, and third, this will (see below) change the way property lawyers work.
Moreover, the alliance of groups behind this, led by ASTRI, the Hong Kong Applied Science and Technology Research Institute, are not selling this as ‘Wow….! Blockchain…!’, they’re selling this on the basis that it will save time for people. I.e. they’re selling the practical, mundane benefits, not the tech – and that bodes well for popular uptake.
The other aspect that bodes well is that, as far as it appears, the general public won’t necessarily ever have to hear the word blockchain or think about it, no more than we think about computer code when we place a document in DropBox. It’s really ‘back end’ focused.
House buyers don’t care what tech is being used to shunt their paperwork around, or confirm a purchase, or the receipt of funds transferred, they just want the task done as quickly and easily – and safely – as possible.
This is precisely what the Hong Kong project is aimed at. For example, they say: buyers need to follow up with lawyers to get updates on status, each transaction needing at least 15 phone calls on average, thus resulting in considerable inconvenience to buyers. The blockchain platform incorporates procedural notifications to remind buyers of important dates such as the settlement of deposits, key agreement dates, and final submission of formal paperwork.
In a statement they explain: ‘The one-stop blockchain platform can save [time] in a transaction by integrating all the time-consuming intermediary steps: the filling-in of long and complex application documents, the tedious back-and-forth between banks and lawyers, and the time-consuming research into information about mortgage loans. Moreover, the one-stop platform benefits service providers and saves around 47 hours of work. The entire industry chain will save around 55 hours in total.’
It appears to be aimed initially at first time buyers, perhaps because that makes the process a bit simpler, and it is to be rolled out in the second quarter of 2019, i.e. from April onwards.
And, it’s worth repeating, this is not another crypto play – much as Hong Kong and China have been centres for crypto mining and dealing. The blockchain bit is the data infrastructure in the background that helps all that legal data move around and get recorded, and be available for all parties to see in a risk free platform environment, it’s not there to shovel Bitcoins around.
They are also aiming to bring in other banks and interested parties, so this could grow quickly.
Adrian Cheng, Executive Vice-chairman and General Manager of New World Development, one of the partner organisations and also one of the largest property companies in Hong Kong with revenues of over US$7 billion, said: ‘In the past 30 years, the real estate market has very rarely seen advanced technologies introduced to the purchasing process.’
‘Traditionally, buyers, real estate developers, banks and law firms all work separately – until now, there has been no one-stop platform to connect all parties. The new PropTech platform’s greatest advantage is to open up the entire real estate industry chain; it also marks the first implementation of Blockchain technology into the real estate industry. This is a landmark in revolutionising the traditional model while remaining fully in sync with the government’s vision in creating a smart city,’ he added.
Ann Kung, Deputy Chief Executive of Bank of China (Hong Kong) added: ‘[We are] committed to supporting and driving the development of financial technology in order to provide convenient services for the general public…… [this] helps to enhance customer experience by offering a seamless integration of mortgage services in our customers’ property purchase journey.’
Of course, the proof is in the pudding. But, in this case, it does seem real, primarily for the reasons given above: this is aimed at making life easier for the buyers – which will give these businesses a competitive advantage, as who doesn’t want to make property purchases easier?
Also, in terms of rolling this out, they don’t need to do much more than all agree to work together. The buyers don’t have to change anything, they just need to use the new platform, which the sellers are providing to them as part of their service.
All in all, if anyone is going to see blockchain tech adopted at scale, then this one looks like the real deal. Let’s hope it is and that it can indeed reduce the time and friction that makes property transactions such a grind.
The partnership set out what they see as the six key advantages of their new platform:
24/7 Streamlined Service with no Restrictions on Time or Location
With the aid of the new high-end encrypted network, buyers, property developers, banks and related bodies will break away from traditional procedures and will benefit from the seamless integration of each element in the whole industry chain. Completely free from location restrictions, buyers will be able to enjoy a far faster and more user-friendly service with easy access to all information, also benefitting from regular status updates on mortgage applications and procedures.
Saving Six Hours in Mortgage Application Procedures
First-time buyers are usually directly involved in comparing mortgage proposals from at least four banks, a process which requires repetitive, complex and extensive paper work. The Blockchain platform will send the purchaser’s authorised, encrypted and digitally signed provisional agreement to the selected banks, saving buyers at least six hours of following up with the different banks, and thus dramatically shortening the time spent in the application process.
Instant Intelligence – Keeping Buyers on Track
First-time buyers have to sign legal documents and complete payments in a given time-frame. It is easy to miss transfer deadlines or leave out certain steps, and this can lead to unnecessary loss and delay. Buyers also need to follow up with lawyers to get updates on status, each transaction needing at least 15 phone calls on average, thus resulting in considerable inconvenience to buyers. The Blockchain platform incorporates procedural notifications to remind buyers of important dates such as the settlement of deposits, key agreement dates, and final submission of formal paperwork. The new platform allows a brand-new hassle-free purchase experience for all customers, where buyers can easily access instant updates and relevant information, saving around two hours during the process.
Quick Digital Verification of Buyer’s Information
Under the old model, developers, banks and related bodies each needed to input the buyers’ information and verify it manually and separately. All information required painstaking input and verification by hand. But in the new system, buyers can authorise banks and related bodies to access their securely encrypted information through the blockchain platform. This can drastically reduce time and procedures, making the process far more efficient.
Environmentally Friendly and Paperless Procedures
In the past, whether for bank mortgage application, a lawyer’s preparatory document, or a developer’s progress report, if buyers were applying mortgages with four different banks, it was necessary to print a large number of documents involving at least 120 sheets of paper. With the introduction of the Blockchain platform, all parties can reduce unnecessary document printing, and the entire process become far more environmentally friendly, while saving precious time and resources.
Open Up More Exciting Possibilities for the Real Estate Industry
NWD is active in reforming traditional industries. Last year, we created a brand-new online registration service for first-time buyers. We introduced initial deposit by credit card to replace cheque payment, thus eliminating wasted time for buyers forced to wait in bank queues. In these ways and more, our blockchain platform will reshape the whole real estate industry and establish a new era: Property-Purchase 2.0.
BOCHK is the first bank to participate in the property-purchase Blockchain platform in Hong Kong. NWD invites other banks to join the platform so that a wider range of mortgage plans can be offered to new NWD property buyers, satisfying their diverse needs more effectively.
Safe and Reliable Blockchain Technology
This utilises a distributed system to verify each transaction so that transfers are guaranteed to be safe and secure. Information held on a blockchain exists as a database, shared by buyers, sellers, banks and lawyers. The records are truly public, transparent and traceable so it is difficult for a transaction record to be corrupted. Information security is thereby greatly enhanced.