Applying Action Design Science Research to Develop a Conceptual Design for Smart Contracts in Real Estate Transaction Processes: The Potential of Blockchain Technology for Transaction Symmetry, Speed and Transparency

Abstract

Commercial real estate transactions are notorious for their complexity, which stems from multiple property brokers, legal entities, illiquidity, heterogeneity, and a lack of transparency. This conceptual study proposes a novel approach to address these challenges using blockchain technology, which enables buyers and sellers to transact in an informationally symmetrical way within an open real-estate ecosystem. The proposed conceptual model employs tokenisation on the blockchain and is developed using the Design Science Research Methodology and Action Design Science Research approach. The model undergoes multiple stages of evolution, including pre-design, which is validated through expert interviews, to arrive at the final conceptual design. The study identifies six key factors that influence the application of blockchain in real estate transactions, including adoption, governance and compliance, transaction costs, transparency and immutability, security, and scalability. Overall, the study suggests that blockchain has the global potential to significantly reduce transaction costs and improve efficiency in the real estate industry, making it a promising solution for the challenges facing the sector.