Blockchain-Based Smart Contracts for Transparent Real Estate Transactions in Malaysia

Loh, Zu Jian (2025) Blockchain-Based Smart Contracts for Transparent Real Estate Transactions in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

Text RES#Loh Zu Jian#22WVR15227_R2.pdf Restricted to Registered users only Download (3MB)

Abstract

The integration of blockchain-based smart contracts into real estate transactions presents a transformative opportunity to revolutionize the traditional processes in the real estate sector. This study, titled Blockchain-Based Smart Contracts for Transparent Real Estate Transactions in Malaysia, seeks to explore the potential of this technology by focusing on its advantages, challenges, and solutions for seamless adoption. With the real estate industry often criticized for its lack of transparency, inefficiencies, and susceptibility to fraud, blockchain technology offers a decentralized and secure solution capable of transforming the way transactions are conducted. The primary objective of this research is to investigate the advantages and disadvantages of utilizing blockchain-based smart contracts in real estate transactions. Blockchain technology, known for its transparency, immutability, and security, promises to enhance trust and efficiency in real estate dealings. By automating transaction processes through smart contracts, intermediaries such as brokers and lawyers can be bypassed, thereby reducing transaction costs and expediting the process. Furthermore, the unchangeable nature of blockchain records ensures the accuracy and security of transaction data, minimizing the risks of fraud. However, alongside these advantages, the study also identifies several challenges. Technical complexity, the need for specialized knowledge, regulatory uncertainty, and scalability issues are significant hurdles that impede the widespread adoption of this technology. A second objective of the study is to examine the issues and challenges related to the integration of blockchain technology and smart contracts in traditional real estate processes. The research highlights that while blockchain holds great promise, its implementation in the real estate sector is hindered by several factors. One major challenge is the technical expertise required to operate blockchain platforms and develop smart contracts, which many industry professionals lack. Another critical issue is the regulatory environment, where the absence of clear legal frameworks for blockchain and smart contracts creates uncertainty about their enforceability. Additionally, scalability concerns, especially the system’s ability to handle a high volume of transactions, pose significant limitations. Lastly, data privacy and security concerns emerge, as blockchain’s decentralized nature raises questions about how personal and transactional information is handled, stored, and protected. In response to these challenges, the study also explores possible solutions for enhancing the seamless implementation of blockchain-based smart contracts in real estate transactions, which constitutes the third objective of the research. The research suggests that technological innovations aimed at simplifying blockchain platforms and making them more user-friendly could help overcome the technical complexity barrier. It also advocates for the development of advanced security measures, such as encryption and privacy-preserving technologies, to address data privacy concerns. Regulatory reform is highlighted as another crucial step towards the successful integration of blockchain technology. The establishment of clear legal frameworks and industry standards is essential to ensure the recognition and enforceability of smart contracts in real estate transactions. Collaboration between industry stakeholders and regulatory bodies is recommended to create a robust and supportive legal environment for blockchain adoption. To address scalability challenges, the study proposes the adoption of interoperable blockchain networks that can process large transaction volumes and operate across different platforms. To gather data for the study, a mixed-method approach was employed, combining quantitative and qualitative research methods. Surveys were distributed to stakeholders in the Malaysian real estate industry, including legal professionals, real estate developers, and IT experts with knowledge of blockchain technology. The survey results provided insights into the current state of blockchain adoption, the perceived benefits of smart contracts, and the challenges faced by industry professionals in integrating this technology into existing processes. Statistical tools were used to analyze the data, including descriptive statistics and Cronbach’s alpha analysis to ensure the reliability and consistency of the data collected. The results show a high level of interest in blockchain technology but also reveal widespread concerns about the challenges associated with its adoption. In conclusion, this study provides a comprehensive overview of the potential of blockchain-based smart contracts to enhance transparency, security, and efficiency in real estate transactions. While the benefits of this technology are significant, especially in reducing fraud and increasing transaction speed, several critical challenges need to be addressed before widespread adoption can be achieved. By proposing practical solutions to these challenges, such as regulatory reform, technical innovation, and increased collaboration between stakeholders, this research lays the foundation for future work in this field. It is hoped that the findings of this study will contribute to the development of a more transparent, secure, and efficient real estate market in Malaysia and serve as a reference for other markets considering the adoption of blockchain technology.