Digital transformation in real estate: digital transformation in real estate: towards an application of blockchain technology for commercial real estate in Switzerland

The commercial real estate industry ranks among the largest asset classes on the global. Atthe same time, commercial real estate transactions are notorious for their complexity, whichstems from multiple property brokers, legal entities, illiquidity, and a lack of transparency.However, specific industry factors such as heterogeneity and immobility are subject to legaljurisdictions and bound to local markets. This complexity is further accentuated by theheterogeneity and immobility of the real estate market and inefficient manual processes thatincur high-cost structures which places significant pressure on the real estate market. Realestate assets are the backbone of industrialized societies and a support of private wealthcontribution. In this context, innovation plays a key role and depends on the viability with itsdriving forces behind these developments are new technology, maneuverability, organizingdifferently and management.Against this background, this study was motivated to provide important insights into thetransformative potential of blockchain technology and smart contracts in the commercial realestate sector. By decoding traditional processes into smart contracts and embracingtokenisation, the industry can overcome barriers, reduce transaction costs, and realizeincreased revenues. The findings contribute to both academic discourse and practicalimplementation, laying the groundwork for a more efficient and accessible global commercialreal estate market.The aim of this study is to explore a novel solution for traditional process of buying or sellingof real estate assets by identifying current loopholes of the traditional paper-based method andeliminate the human-based interactions by novel, mathematical algorithms based on Ethereumblockchain technology. In doing so, this study proposes a novel approach to address thesechallenges using blockchain technology, which enables buyers and sellers to transact in aninformationally symmetrical way within an open real-estate ecosystem. The proposedconceptual model employs tokenisation on the blockchain and is developed using the DesignScience Research (DSR) methodology and Action Design Science Research (ADSR)methodology. The model underwent multiple stages of evolution, including pre-design, whichis validated through expert interviews, to arrive at the final conceptual design. The studyidentifies six key factors that influence the application of blockchain in real estate transactions,including adoption, governance and compliance, transaction costs, transparency andimmutability, security, and scalability. The findings reveal that encoding commercial real estate processes as ERC777 smartcontracts results in reduced transaction costs and drives revenue and profitability increasesthrough tokenisation. Utilising the ADSR methodology, this research amalgamates asystematic literature study, conceptual model development, prototype creation, and empiricalevidence analysis. This approach provides a robust foundation for understanding thetheoretical and practical implications of integrating blockchain technology and smart contractsinto commercial real estate practices. In this context, the scientific progress of this research,not only showcases the transformative potential of ERC777 smart contracts and tokenizationin commercial real estate but also introduces a novel methodological approach for theexploration of this phenomenon. By advancing theoretical understanding and providingpractical insights, this thesis lays the groundwork for further developments in research andapplications within the commercial real estate industry. In doing so, this study provides animportant platform for future scholars to contribute to the evolving discourse on tokenisation,providing a deeper understanding of its implications for commercial real estate, and uncoveringnew avenues for research and industry application.