The Use of Bitcoins in Dubai Property Market – Potentials & Challenges it Poses
The use of bitcoins growing in Dubai real estate sector.
More developers are now accepting this virtual currency.
The process brings new challenges for currency regulators.
As Dubai, one of the most technologically advanced cities, has gained recognition as a safe haven for investors in the real estate sector, the growing trend of using bitcoins in this city for buying a property comes as a no surprise. Major developers of properties in Dubai accept bitcoins as the payment. It is included in their mode of payment options, which they offer to buyers and/or investors.However, these transactions can’t be completed without the services of a middleman. Despite being an advanced technology, the process of making payments using bitcoins comes with certain complexities in Dubai’s real estate market.Bitcoins are already used in numerous industries as a mode of payment. However, this digital currency made its way to Dubai’s real estate market in 2017 when Aston Plaza & Residences Development became the first major project to transact in bitcoins. Other developments followed suit and encouraged people to use bitcoins for buying different types of properties including villas, apartments, short term rentalresidences, etc.The process, on paper, seems similar to that of using cash to buy a residential property. However, it involves certain complexities due to the fact that transactions made using virtual currency were banned by the UAE Central Bank. Moreover, it doesn’t license financial institutions to process crypto transactions and accept bitcoins as payment. To minimize the complexities associated with the process, a Singaporean crypto exchange Huobi collaborated with a real estate firm in Dubai and devised an alternative solution.As part of the workaround created by this collaboration, the property investor or buyer would need to sell their digital currency to Huobi. The Singaporean exchange will then be responsible for converting the currency and making payment to the real estate firm in Durhams; thus, streamlining the process a little.
The Right Time to Buy Property Using Bitcoins
As the prices of bitcoins fluctuate, it’s a wise idea to use them to buy property when the prices are high. For this, you will need to keep an eye on bitcoin trends to make an informed decision in this regard. After purchasing them, immediately get them converted to the desired currency that you will use to make the payment.
Currency is Not the Factor to Consider
When it comes to making payment via virtual currency, the currency is not the only factor one must consider. Real estate experts advise buyers and investors to check and verify all the details related to the property before advancing to the payment stage. For instance, the buyer must verify the details of the developer and check their legitimacy. Also, before making the payment, the buyer must confirm that the paperwork is complete and quite transparent. There shouldn’t be any hidden term, condition or clause.
A New Set of Challenges
As per the “Blockchain and Cryptocurrency Regulation 2020”, the UAE Central Bank reserves the rights to take action against business entities dealing in cryptocurrency until new regulations related to the virtual currencies are passed. However, with offshore exchanges as introduced by the collaboration between Huobi and real estate firm in Dubai, the currency regulators are not in the equation anymore.
How Real Estate Can Benefit from Blockchain?
Apart from being used as a mode of payment or currency, bitcoins can prove to be advantageous for the real estate sector in Dubai in other ways as well.The conventional process of buying a residential property in Dubai requires the presence of numerous parties including banks, notaries, brokers, lawyers, other than buyers and sellers. For both the buyer and seller, it proves to be an added expense to hire these professionals. However, with blockchain technology, this ordeal will be eliminated. This can happen if property records can be hosted on a public blockchain. This initiative will reduce the need for title agencies.
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