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Office Insider - February 2018

This month’s Office Insider discusses technologies like blockchain and cryptocurrencies, and their role in the commercial real estate space.

Feature Even though

Feature Even though blockchain will take some time to spread across CRE, cryptocurrencies – a type of application build on the blockchain, are already making a mark. A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange, it uses cryptography to secure and verify transactions as well as to control the creation of new units – a process called mining. Basically, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are met, and its value is determined by the demand in the market. Cryptocurrencies have given rise to ICOs, a new capital raising method used by start-ups to fund new projects, and in the case of CRE, to fund new real estate related ventures. A developer or owner offers investors some units of a new cryptocurrency or crypto-token in exchange for other cryptocurrencies like bitcoin, or a fiat currency. The cryptocurrency or tokens then serve two purposes: 1. act as shares or ownership rights in the company which can then be traded, and 2. used to access the company’s services. In the case of CRE, tokens can be used to purchase different services. Some notable examples are: Invest in CRE with REAL The REAL token, issued by Barcelonabased Real, raised USD11 million during their ICO in September 2017. By providing access to their crowdfunding platform they allow individuals to invest in CRE projects across the globe. The platform will operate like a typical crowdfunding site, except it will run on blockchain technology and accept Real tokens rather than fiat money. Page 4 | Colliers International | Office Insider | February 2018

Feature Purchasing a home with PRO The PRO token issued by Propy provides access to the Propy platform, which has listings in cities like New York, San Francisco, Miami, and London, and a decentralized title registry running on blockchain. The firm raised USD15 million during its ICO in September 2017 and made headlines that month when an apartment was remotely purchased through Propy’s platform in Kiev for USD60,000 by a Ukrainian developer. Propy claims it is the first real estate transfer ever done entirely via blockchain. As part of the transaction, the title is automatically transferred by Propy. Rent a co-working space with PBT The PBT token issued by the co-working firm Primalbase has one very specific use: access to Primalbase’s co-working spaces. The Dutch firm raised USD8 million when it opened its first space in Amsterdam, and it has plans to open spaces in Berlin, then London, New York and Singapore. The success of this project remains to be seen, with many questioning the requirements of a token to reserve a co-working space. Blockchain is slowly making way into the CRE space, for now, the main challenge is to get the various parties (landlords, sellers, tenants, brokers, etc.) to understand and agree to the technology. Additionally, the legality of both cryptocurrencies and ICOs is constantly being debated, and while the technology is popular, many do see the potential risks and downfalls that could come with it. For developers and owners privacy is primary concern, they don’t want their data being shared with users across the network, and the truth is that blockchain is fully traceable. Still, it is important to acknowledge one of the fundamental aspects of blockchain: its security. Due to its distributed and open nature, no single government, company, group, or person has control over the information stored there, which also reduces the risk of data loss and/or manipulation. With high levels of security and the opportunity to build applications on top of the technology, blockchain has vast potentials in CRE and across many other sectors. In the long run it will have a prominent place in property, but for now the rate of adoption remains unclear. By Philip Pang Senior Manager, Office Services Page 5 | Colliers International | Office Insider | February 2018