Real estate businesses are challenging to run. The degree of capital & resources, documentation processes, attention to security & the environment, and eventually the quality of the product delivered – each touchpoint is more complicated in real estate than most other industries. That said and done, the real estate industry is going through a renaissance period with each process in the value chain being transformed for efficiency.
Generative design, 3D printing, and pre-fabricated projects are on the project side of things. They also require capital investments and critical operational changes. Instead of just starting with the next major trend, your real estate business should evolve by tackling the most pressing challenges it faces today.
Key Challenges Standing Against Real-Estate Businesses
1. Raising Capital and Project Finance
One of the primary concerns for real estate developers is the challenge of financing the project. Until now, most real estate developers have focused on raising capital at the SPV level, adding some capital from their balance sheet, and using project finance services from a consortium of banks to raise funds.
As real estate markets become more challenging, the need for more significant projects is increasing. Municipalities now want bigger projects that use land assets more efficiently. But more significant projects also mean more capital to be raised and more risk for the investors. That has been the key reason why the more prominent real estate firms and investors keep getting bigger. In contrast, the small & medium scale developers and operators have to arrange financing.
2. Liquidity Management and Sub-Contractor Relations
Once the project gets into its early development stages, the project management team, developer, and the project owners must create an extensive list of sub-contractors & vendors. From designing to security to engineering, procurement, and construction – the team has to deal with dozens of vendors. With each added vendor, the project has to accommodate the payment concerns for a new party. This is the key reason it can become challenging to manage liquidity in the project’s initial stages.
3. Changing Institutional and Retail Consumer Demands
As more institutional investors get into financing directly at the project development level, the need for compliance and reporting goes up. At the same time, the development team has to stay abreast with the needs of the consumers. Many project developers are dependent on early payments made by the customers to manage liquidity. In such financial structures, reporting the project’s progress to investors and consumers can be challenging.
4. Meeting Environmental and Compliance Standards
For larger projects that will impact the entire community, project owners often create a supervisory committee that looks into environmental compliance. They would hire independent contractors and consultants to assess and certify the projects. Some banks make such tests mandatory to mitigate compliance risks in the projects they finance.
5. Managing Multiple Project Lifecycles and Standards Outputs
While this is a good problem to have – it is still a problem. When you scale your real estate business, you will have multiple projects working at full pace. Even if you have a dedicated team for each project, the administrative function must ensure precise documentation across all the projects.
6. Keeping Tenant, Lessee, and Owner Data Intact
While most real estate firms engage with real estate agents to get the retail leads to their projects, some of them can take this function internally. When a project team is dealing with the prospects directly, their data becomes a responsibility for the firm. For more expensive projects, firms often market across continents. This can expose them to comply with updates laws such as GDPR, CCPA, and several others.
Leveraging Blockchain for Real Estate Business Transformation
How Can Blockchain Transform Your Real Estate Business?
1. Providing Trustworthy Documentation to Project Owners.
With project owners getting more involved with developers, the need for trustworthy documentation has become more urgent than ever. Developers can use tamper-proof blockchain technology to provide documents that have been reviewed, edited, and delivered with finesse. Since each document carries a unique Blockchain ID and can be accessed only by the QR Code made available by the document owners, the project developers can freely share the document with the project owners without risking data leaks.
2. Managing Documents with Sub-Contractors and Vendors in a Secured Manner.
By using a blockchain-enabled platform, the project developers can quickly review the latest version of the secured document with a high degree of reliability on the information it contains. Since the blockchain is practically tamper-proof, the document owners can easily verify the end-document’s security by checking the blockchain ID visible to the project developer.
3. Keeping Investors in the Loop at the Commercial Document Level.
For new project developers or the ones who have a high cost of borrowing, the lenders may seek more transparency with the operations. Generally, the project owners keep their lenders updated with presentations and reports made available at regular intervals. With a blockchain-enabled network of documents, the developers can back each line of claim in their reports with the updated, secured, and tamper-proof invoices raised and delivered to vendors & project owners. Such practices can also make new developers more creditworthy for the banks, creating more trust and decreasing borrowing costs in future projects.
4. Streamlining Processes with a Unified Platform.
Suppose the project owners can somehow access a federated platform that provides them with secure access to blockchain-backed documentation. In that case, they can cut the administrative complexity of scaling a real estate business. With all the documents stored on one secure platform, the real estate development firm’s management team can access and keep track of each document without having to pull data from different sources. This reduces the risk of errors and ensures the team has access to necessary documents promptly.
As real estate businesses try to tackle a cohort of challenges like financing, compliance, project management, and reporting to stakeholders, blockchain can serve as the central solution for generating value. ProofEasy is a unified platform that uses QR Codes to provide secure access to documents, helps firms keep their documents stored in a federated manner on one platform, and assists project developers in using blockchain IDs for tamper-proofing the documents. It is easier to integrate ProofEasy in your real estate development business and streamline your project management practices. Click here.. to know more!