Dubai property market still has an open mind on crypto-based purchases

Real estate investments have long been considered one of the safest forms of growing your wealth, if not the safest. Ray Brown understood this when he said that the best time to buy a house was always five years ago.

Especially in Dubai, this is true – the epitome of stability and potential in the global real estate market, with its strong legal framework to protect stakeholders, its remarkable past and future growth trajectory as a global hub for business and tourism, and its underlying macroeconomic fundamentals.

It is no surprise that the “crypto-rich” of the world favor the emirate as an investment destination. But how do we see crypto-property purchase requests and transactions increasing exponentially at a time when Bitcoin has fallen nearly 57% year-to-date and the crypto market in its together crashed over $2 trillion in the past eight months?

Surely crypto aficionados wouldn’t want their investments to turn into realized losses, and instead want to hold their coins until the market returns to its upward curve? However, this virtue of patience is not found among all investors. As with ups and downs in all industries, there is always a downside.

It could be said that many of those who have created wealth through crypto investments in previous years, and who are appalled by the downward trend and perhaps anticipate further decline, are now looking to convert all, or at least a part, of this highly volatile asset class. in the exact opposite, the safest and most stable investment one can make – Property in Dubai.

One could even go so far as to say that crypto investor sentiment is at rock bottom. This asset class is based solely on speculation, and it is directly linked to discretionary income, which is rapidly shrinking following the pandemic first, then the Russian-Ukrainian conflict, and now inflation. The downward spiral is further exacerbated by people abandoning crypto assets for other more stable investments – and what is more stable than real estate ownership.

Why Dubai?

There are many outstanding real estate investment opportunities around the world, so why Dubai? Why does this emirate attract the highest number of millionaires in the world with a projection of 4,000 of them migrating to the United Arab Emirates in 2022, far exceeding Australia, Singapore, Israel, Switzerland, the United States, Canada, New Zealand, the United Kingdom, India and others, according to the latest Henley Global Citizens Report?

Dubai seems to be the perfect place for high net worth and ultra high net worth individuals in crypto to gradually gain a foothold in the real estate market. The remarkable pace of technological advancement today is matched only by investors’ voracious appetite for stellar returns in both the physical and digital worlds.

Cryptocurrency is present in exchanges and exchanges in all sectors, with real estate being the most interesting for investors. As it is evident that cryptocurrencies will play an important role in future real estate transactions, Dubai has established the Virtual Assets Regulatory Authority to outline the playing field for a virtual assets industry, cementing its position as a crypto hub. leading. This new authority provides a secure and progressive operating framework for the virtual asset industry to evolve, while ensuring market and investor protection.

The move attracted well-known cryptocurrency exchanges to Dubai, contributing to investor sentiment in a big way. Despite the fact that the Emirates has not yet made cryptocurrency legal tender, it accepts trade in various segments – real estate, at least through third-party exchanges and not through direct transactions, tops the list .

Why use crypto for real estate?

Crypto millionaires buy luxury real estate exclusively through cryptocurrency or split the cost between cash and cryptocurrency transfers. Over 40 million Americans own Bitcoin and are actively looking for ways to diversify their crypto portfolio into more stable assets. These investors are looking for risk-free, efficient and optimal solutions without downtime.

Crypto assets are immune to inflationary pressures and that will always matter to investors.

With crypto, there is no need to wait for a bank to open to initiate a wire transfer – blockchain-based transactions are safer and faster than conventional methods. For this to become a norm, we will need more time and acceptance.

Digital transactions are gaining popularity in international real estate markets due to their speed and simplicity. By using them, investors are not required to transfer funds between foreign banks or deal with currency conversions. With an accelerated payment process, the acquisition of real estate becomes possible in just a few weeks.

Cryptocurrencies, such as Bitcoin, are transparent – it is easy for organizations to verify the legitimacy of real estate investors wishing to buy using cryptocurrency. When buying real estate through cryptocurrency, investors can fix the price in fiat currency at Coinsfera and then convert the funds to Bitcoin. Owners bear no volatility risk if they convert it back into fiat currency after the transaction is complete.

Another cautious justification for real estate investments in cryptocurrencies would be the desire for a reliable long-term store of value. Unlike traditional currency, most cryptocurrencies have a finite supply controlled by a set of parameters for the elliptic curve. This prevents the governing body or entity from losing value due to inflation.

Additionally, these governing bodies cannot tax or access cryptocurrencies without the consent of their owner due to their crypto structure. Because of this characteristic, cryptocurrency is attractive to those concerned with hyperinflationary events, more general inflation, or crisis scenarios. The deflated and censorship-resistant characteristics of Bitcoin, in particular, have attracted a lot of attention and are why many call it digital gold.

Where do we go from here?

The majority of developers are probably still unfamiliar with the impact of crypto on the real estate investment landscape, as this still relatively new asset class defies conventional ideas. So, the foundations of this new financial framework are being laid, paving the way for industry stakeholders to learn how they can leverage it to buy and sell real estate.

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Farhad Azizi, CEO of Azizi Developments, said, “As crypto payments become an alternative, they will continue to affect real estate investment processes in ways yet to be discovered.”

This will have serious consequences and will raise more strategic questions: how far can the digital real estate revolution go? How to stay one step ahead? What’s in it for early developers, governing bodies, and other industry players who accept cryptocurrency deals as legitimate, legal, enforceable, efficient, and here to stay?

Convenience, an expanded market, and increased security are the main reasons that will continue to drive the popularity of using digital currencies for real estate transactions. As crypto payments become an alternative, they will continue to affect real estate investment processes in ways yet to be discovered.

The author is CEO of Azizi Developments.

Penny D. Jackson