As a successful real estate investor over many years, I have always been fascinated by the idea of ‘disruptors’ – not just in real estate, but across the whole of the global economy. It feels as if many sectors have experienced changes in recent years that have been truly transformative, and these kinds of dramatic, game changing dynamics should, I believe, be of huge interest to anyone who is trying to predict the future direction of the markets. But before we look at potential disruptors in the real estate market, it is probably worth exploring exactly what mean by the term.

Transformative tech

Most commonly – and particularly in the last decade or so – the term has been used to describe so-called ‘disruptive technology’. This could be anything from the smartphone to online shopping – the point being that these kinds of technologies are not just new, or innovative, but also capable of completely changing the entire way a particular sector works.

And this, of course, has huge implications for the existing businesses operating in the rapidly changing sector. Do they change with the times or attempt to stick to what they know, in the hope that the disruptor doesn’t turn out to be quite as transformative as it first appears? Or do they try to play catch-up, and invest in the research and development necessary to help them to compete with the new companies who have adopted the changes already? It’s a tough decision to make, but the risk goes both ways too.

Backing the disruptors

As an investor, looking at putting your money into a disruptor company can be tempting. They are at the cutting edge, they are changing the landscape in the sector in fundamental ways, and they are, by their very nature, innovative and forward thinking. But these kinds of businesses also represent an inherently risky choice – the disruptive changes (whether it is technology, or a new service delivery model), may take time to be adopted by the wider market, and the company you back may not be able to sustain their position.

All that being said, what is going to be the biggest disruptor potentially facing the Mexican real estate market?

A digital revolution in real estate

Well – putting aside the non-tech factors that might dramatically effect the sector, such as the NAFTA negotiations – I’d suggest that the next big technological disruptor in real estate has to be blockchain. It’s a technology that is already transforming the financial services industry, and that revolution, which has led to the creation of crypto currencies like Bitcoin, will soon be doing the same for real estate.

The first area it is likely to have an impact is simply around payments. The global real estate industry, obviously, is huge – worth around $217 trillion, and the lure of using crypto currencies to buy and sell properties is likely to only get stronger. The main reasons for this are the convenience of the payment mechanisms themselves and the lack of any need to involve anyone else – no brokers or lawyers to pay. That could represent an opportunity for real estate investors to make huge savings on their transactions and to increase the speed and convenience of buying and selling property.

Transforming property ownership

We’re already beginning to see more and more properties being sold using crypto currencies, avoiding those big commission costs, but the disruptive impact on the industry represented by blockchain goes well beyond simply making it easier to make payments.

It is also likely that blockchain technology will underpin the systems that make it more straightforward to transfer the ownership documents themselves online, in a way that is safe, convenient and highly resistant to fraud.

A shared future for real estate?

One last word on another way in which blockchain could prove to be the next big disruptor in the real estate industry. For as long as we can remember, real estate investment has been the preserve of the wealthy – it requires a considerable amount of money to be able to invest in buildings or land. Blockchain technology can potentially transform this situation, opening up the market to a whole new sector of investors.

How? Well, again it comes down to crypto currencies. Essentially, using crypto currencies allows for the ‘tokenisation’ of assets, such as property. This essentially means that the asset (the property) has a digital equivalent – the token. Often, the token might represent a whole property, or piece of land, but the key here is that in the world of blockchain, these tokens are divisible.

The consequence of all this is that ownership of the piece of real estate can then be divided up and sold to multiple owners. I think this idea of ‘fractional ownership’ is fascinating, as it represents a new way for many more investors, with any level of spending power, to be able to get involved in the sector.

That has to be an exciting – and truly disruptive – development for our sector.