UAE real estate: The preferred investment destination for new Bitcoin mega gainers

At the time of writing this article, the price of one Bitcoin is $63,322. On the same day last year, the value of one BTC was $6,900. This is to say, a Bitcoin holder with 15 BTC, looking at $100,000 in valuation last year, is now a millionaire! The dramatic increase in valuation, along with institutional adoption and backing from leading techpreneurs like Elon Musk and Jack Dorsey, is giving traction to Bitcoin as an asset class, and as a transaction medium.

The latest in this space is how the “crypto-rich” — ones who made big bucks from the latest bull run of Bitcoin — are deploying the surplus capital at their disposal. Some are opting for a safe bet: Bullion. In their defense, bullion like gold and silver have been the go-to hedge instruments for ages. But, since these investors have a taste for quick returns, bullion can get too conservative for their liking. The next stop: Real estate. Although slow-moving and largely illiquid, real estate has unique opportunities and attractions, which are hard to overlook. And those buying into this notion are now increasingly looking at the UAE real estate market. The reasons for this are as follows:

Diversification into tangible assets

Bitcoin has many alluring characteristics such as liquidity, accessibility, transparency, etc. But the mega gainers are also aware of its flipside, including regulatory challenges, volatility, etc. So, instead of keeping all their eggs in one basket, many are looking to diversify their holdings. Regardless of how the crypto Bull Run pans out, the mega gainers want investments that will continue to pay dividends. And real estate makes a compelling case, especially for those looking for golden visas, second homes and holiday homes.

Such requirements inadvertently lead to Dubai, due to high, achievable rental yield. Dubai’s preeminence as a future-ready, low-risk and high-reward real estate destination needs no introduction. But in today’s post-COVID context, there isn’t a better service economy than Dubai. Attractive golden visa programs, a strategic business hub between the East and the West, stable geopolitics and most importantly, a nation with a soft stance on cryptos, is driving the “crypto-rich” to Dubai.

The Chinese connection

According to property services firm Allsopp & Allsopp, Chinese investors are among the top three buyers in the UAE property market in 2021. It’s interesting to note that Chinese buyers were not in

the top-three list in 2020. And their ascent has not come with reduced participation from buyers of other nationalities, but by their own increased participation. While the Chinese connection can be correlated to many factors, from geopolitics to pandemic management, China’s crypto footprint is being pointed out as the reason behind the recent uptick.

Although China has banned crypto transactions, it still accounts for around 65% of all Bitcoin mining globally. So, naturally, many Chinese Bitcoin “HODLers” have struck gold over the last year. And owing to increasing government crackdown, many Bitcoin miners are leaving China, in search of greener pastures. This exodus could be the reason behind increasing Chinese investments in UAE real estate.

UAE’s soft stance on crypto

“The UAE has not legalized cryptocurrencies.” — this was the Central Bank’s last statement on Bitcoin. This is to say, while there is no legislative framework for crypto currencies, the UAE has taken a soft stance towards them. The UAE’s Blockchain strategy 2021, aimed at hosting 50% of government transactions on Blockchain, and State-supported smart contract and tokenization initiatives, exemplify this stance.

Meanwhile, strategic partnerships between property management companies and crypto brokerages have resulted in the acceptance of Bitcoin as rent in the UAE. Since the regulatory backdrop is obscure, landlords and facilitators have their own guidelines in place, in order to ensure compliance with UAE’s laws. The process includes signing of an SPA agreement, and KYC completion, among other things. In any case, the UAE offers a ray of hope for the future of crypto, and boasts a coveted real estate market. That is more than any leading market can — or will — offer at the moment.

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