The Case for Using Blockchain to Secure Commercial Real Estate Data

May 11, 2019

In commercial real estate, there are two key points in time where property-related information that is not efficiently organized and archived can impair asset management and drag down financial performance:

When a new building or property development is completed and a handover is executed from the development/construction team to the owner/operator team. In this instance, the damage may not be immediately apparent but, when management needs to respond to an event down the road, countless hours can be lost looking for data needed to respond to the event because the handover package was not safely preserved in a readily accessible archive.

When properties are sold and transition to new ownership. During the sales process, due diligence is constrained by time and availability of data. Acquirers pore through data rooms to find what they need but data gaps can slow the process and can impede valuation. Data can also slip through the cracks if the acquirer utilizes different software or systems to manage their information than the prior owner.

In general, property-related data is spread across many internal platforms, both on a property and/or portfolio level, as well as external commercial and government databases. Pulling selected data from these various repositories into a unified data architecture backed by blockchain has many use cases for owners and operators.

For example, in the event of a disaster (e.g. fire, flood, theft, etc.), owners will have an easier time filing insurance claims because they can document what existed within the building prior to the incident. When things break or repairs are necessary, operators will be able to know where items were originally purchased, for how much and whether they have warranty claims. The same data architecture can also be used to track the service life of equipment, components and finishes enabling future purchasing decisions that are better informed and optimized around the best performing items.

When properties change hands, different owners often have different management information systems challenging data continuity. The envisioned data architecture offers an unusually high degree of depth so that potential acquirers can query to find the answers they crave without having to piece things together for themselves. A more efficient due diligence experience is expected to translate to better valuation because it reflects favorably on the overall condition and management of the property.

In our market research, industry participants are almost universally interested in blockchain to gain better control over their property-related data. The strength of blockchain lies in its unique ability to provide external validation as to the authenticity and timestamp of important data. This attribute is critically important because sound financial decisions and efficient operations require ready access to accurate data. The blockchain layer is what renders dealing with disparate IT systems moot. It is “the” constant immutable archive that safely preserves historical data and keeps it safe and accessible. Lack of trust in data adds billions to the cost of doing business and the addition of a blockchain layer is a potentially huge advancement in the real estate industry. Properties last for decades, and thus the data architecture should have at least the same longevity. In each of the above use cases, the blockchain layer is what gives the data architecture permanence, credibility and efficacy.

CPROP is actively working with real estate industry stakeholders to understand how to best address the data challenges described above. Our product development efforts are focused on creating a single, unified data architecture pulled from multiple data platforms, in accordance with legal and regulatory requirements. Users will have the ability to generate a comprehensive property report on demand and access related back-up information via a user-friendly, permissioned interface.

To keep product costs low, we strive to capture data utilizing APIs, robots and other methodologies to scrape existing public and private sector databases with as little manual intervention as possible.

We envision a permissioned blockchain layer that can be polled to validate data and timestamps when permissioned users access the central database. Polling would take place as a background process, so users need not interact directly with the blockchain. Instead, polling would manifest as an indicator that data viewed in the database has been certified as accurate, along with a visible timestamp. This is what makes our approach unique – our product will self-certify via blockchain as to data accuracy and timestamp.

CPROP was formed by serial entrepreneurs with backgrounds in commercial and residential real estate, technology, marketing and finance. We develop proprietary and white-labeled blockchain-enabled applications that reduce the costs and risks associated with doing business in the global real estate industry.

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