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Buying real estate in Dubai with cryptocurrency
27 Feb 2020
Buying real estate in Dubai with cryptocurrency, fact or fiction?
Location: Dubai, UAE
An increasing number of real estate developers in Dubai and other Emirates offer the possibility to pay with cryptocurrencies these days. Is this merely marketing or the payment method of the future for new projects in Dubai?
What are cryptocurrencies?
Fully understanding what cryptocurrencies are and how they work is essential when thinking about using them for investment purposes. Cryptocurrency is code-based money or in other words, an encrypted string of data that indicates a single unit of the currency, for example, Bitcoin (BTC). The total cryptocurrency economy is overseen by a peer-to-peer protocol.
Some of the most famous cryptocurrencies include Ethereum, Ripple, Libra, and Bitcoin, although there are many others. To use cryptocurrency, individuals or companies, need to create an online wallet to send and receive the cryptocurrency of choice. All transactions are secured with cryptography which ensures that the balances and transactions are safe.
| Advantages | Disadvantages |
| Creating a wallet will take only a few minutes which makes for an easy setup | Wallets can be hacked and the currency stolen |
| Using cryptocurrency is entirely anonymous | Huge fluctuation in the prices of cryptocurrencies |
| Absence of transaction fees | A limited number of merchants accept cryptocurrency |
| Transactions are faster than using the regular banking system | Rules and regulations on cryptocurrencies are increasing year on year and can have a negative impact on the exchange rate |
How are cryptocurrencies used when buying real estate in the UAE?
Real estate developers and the government of the UAE have big plans with cryptocurrencies. But as with most things that are under development in the country, this process has its ups and downs. Let’s take a look at some of the latest crypto developments on the market in Dubai and the rest of the UAE, for a better understanding of the current situation.
Mixed statements from Emaar
Emaar Properties is one of the biggest real estate developers in the UAE and responsible for the development of world-famous developments such as the Burj Khalifa and the Dubai Mall. In an official statement, the company said it does not accept cryptocurrencies as a payment option and that the majority of their transactions are done in either UAE dirhams or US dollars. However, according to several financial reports, Emaar allegedly allows its clientele to pay for their real estate with Bitcoin and Ether.
In the last quarter of 2019, Emaar announced that it is planning to launch its own blockchain loyalty token called EMR. Emaar customers receive these tokens as a sign of appreciation for their loyalty or as a reward for business referrals. The EMR’s can be used to buy real estate, finance a stay in a hotel, or purchase items at retail outlets.
The tokens can also be traded with other users and are managed with the dedicated EMR app which is available for both IoS and Android. Engaging the modern digital-native, mobile-first generation is the main aim of the project, expecting that this will lead to potential sales in the future.
$325 million luxury development sold in Bitcoin on hold
In 2017 the Aston Plaza in Dubai was launched, the first project in the world that allowed residents to fully pay for their apartment in Bitcoin. The project was planned to consist of 1.300 apartments of which 150 units were to be sold by Bitcoin only. A 1-bedroom apartment was to be sold for 15 Bitcoins and a 2-bedroom unit would go for 45 BTC.
Although the project was launched and roughly 25% was built, government inspections of the construction site have shown that everything has been on hold for years now. The initial completion date of August 2019 has been missed as well. Despite the Aston Plaza website still being online, it is unlikely that the project will ever be completed.
Huobi and Fäm Properties join forces
Mid-January 2020 Huobi, a Singapore-based digital asset exchange provider, announced a partnership with Fäm Properties, a leading real estate agency from the UAE that recently was awarded by the Dubai Land Department (DLD) for recording a total sales value of over 10 billion AED over the last decade. The partnership means that Fäm Properties can offer their clients payments in the most popular cryptocurrencies on the market, such as Bitcoin (BTC), Ripple (XRP), Ethereum (ETH) and 3 others.
Huobi, in turn, offers Fäm Properties the possibility to easily convert these cryptocurrencies to so-called fiat currencies, such as US dollars, Euros, UAE Dirhams, British Pounds and others. Huobi is licensed by DMCC, meaning that all transactions are safe, secure and in compliance with all rules and regulations.
Both parties involved stated that the new cryptocurrency payment options will boost liquidity and improve the stability of the market. Huobi also expects that institutional investors, as well as individual millionaires, will be the ones fuelling the growth of cryptocurrencies in 2020.
Arms &McGregor partners with Bloom Technology to attract property investors from South Korea
Starting from 2020 customers of Arms &McGregor, a Dubai real estate firm, can purchase a property in the UAE using cryptocurrency. As a result of the partnership with South Korean blockchain company Bloom Technology, investors can pay for properties using the Locus Token, a cryptocurrency issued by Bloom.
The companies expect to attract more than 1.000 property investors from South Korea as digital payments are free of remittance charges and increase transparency. The collaboration between the prop-tech and fin-tech companies allows technological advancements for transactions to take place by using a digital platform integration.
The future of crypto in the UAE
With the growing use of cryptocurrencies on a global scale, a large number of industries will be transformed, including real estate. Although technological advances come with lightning speed, mainstream acceptance of cryptocurrencies will take time, as updating legal and regulatory frameworks goes at a much slower pace.
Dubai has always been a trendsetter on the global real estate market and aims to be a pioneer when it comes to the introduction of crypto on the real estate market. However, how fast and to what extent it will change the real estate market in the UAE remains to be seen.
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