How Dubai Real Estate Attracts Crypto Investors

02.09.2024 09.09.2024 117 0 0 Author Elena Kirichenko

In the context of slowing global economic growth and general political instability, Dubai real estate remains one of the best assets for saving and increasing funds. The initiatives of the UAE government aimed at attracting international players have made it popular among crypto investors.

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Cryptocurrency in the Dubai Real estate Market

Transactions using cryptocurrency in the Dubai real estate market are gaining popularity. The largest construction companies in the emirate began accepting payments in this format several years ago. So, the developer Nakheel Properties allows you to pay for real estate in Bitcoin and Ethereum from 2022 thanks to cooperation with the Hayvn service. Damac Properties is also working with the same types of cryptocurrencies – another leading developer that launched more than 20 new projects in 2023 alone. Ellington Properties has entered into an agreement with the Bitcoin Suisse platform to accept payments in Bitcoin. Developer MAG, cooperating with CoinMENA, concludes deals using stablecoins, including USDT and USDC.

Nikolay Kuznetsov, Head of the Investor Relations Department at Empire Heights, “According to our calculations, today less than 10% of developers and real estate agencies in the emirate actively use cryptocurrency in transactions. In the next 2-3 years, we expect growth to almost 30%, that is, about a third of the market will work with cryptocurrency. This is inevitable, given the growing popularity of digital currencies and government support. Cryptocurrencies are a very convenient tool. It is now important for the state to learn how to regulate their use so that it is as safe as possible,” the specialist explained

In addition to direct payments, other options are available to crypto investors. Some buyers resort to the services of intermediary firms to purchase real estate from developers who do not work with this payment format. The intermediary receives a crypto transfer and sends the developer a payment in traditional currency for a certain commission.

When concluding a transaction with secondary real estate, the possibility of paying with cryptocurrency is determined by the owner. If he agrees, there are no difficulties. If one of the parties does not have a cryptocurrency wallet, an intermediary company can help with its creation.

“According to our calculations, today less than 10% of developers and real estate agencies in the emirate actively use cryptocurrency in transactions. In the next 2-3 years, we expect growth to almost 30%, that is, about a third of the market will work with cryptocurrency. This is inevitable, given the growing popularity of digital currencies and government support. Cryptocurrencies are a very convenient tool. It is now important for the state to learn how to regulate their use so that it is as safe as possible,” the specialist explained

Government support

Dubai Blockchain Strategy

The government of Dubai began the development of blockchain technologies in 2016. The initiative was put forward by the Vice President of the UAE and ruler of the Emirate, Sheikh Mohammed bin Rashid Al Maktoum. Within its framework, the Dubai Blockchain Strategy was developed, according to which it was planned to transfer 50% of all financial transactions to a blockchain platform developed in collaboration with IBM.

Real Estate Blockchain Initiative

In 2017, the Emirate’s Land Department launched the Dubai Real Estate Blockchain Initiative platform, which allows converting real estate rights into digital tokens with shared ownership. This gave investors the opportunity to freely buy and sell shares in residential and commercial projects.

To use the platform, you must:

Identify the asset.
Perform a due diligence check, which will determine whether the asset is suitable for generating tokens.
To document the rights and obligations of token holders.
Generate tokens representing real estate shares.
To sell tokens among investors.

Experts believe that this approach has many advantages:

lowering the market entry threshold;
increasing transaction transparency;
the possibility of portfolio diversification by investing small amounts in shares of various real estate;
acceleration of operational processes;
cost reduction.

Thanks to blockchain technology, information about each transaction is recorded independently on several computers. This ensures the safety of operations, since the records made cannot be changed individually. Thus, the Land Department has opened up new opportunities for crypto investors and made the process of buying real estate more accessible, secure and efficient.

Virtual Asset Regulation Law

In 2022, the Dubai Virtual Asset Regulation Law came into force in the emirate, aimed at protecting the interests of investors. A special Virtual Assets Regulatory Authority (VARA) has been created to track transactions using cryptocurrency and protect users’ personal data. Together with the digital transformation of local banks, working with cryptocurrency transactions has become more efficient.

These initiatives have made it possible to create a safe environment for the development of blockchain in Dubai, while most countries, trying to regulate the activities of crypto investors, only create additional obstacles.

“The Dubai government is committed to innovation, wants the emirate to become a global technology leader, and actively promotes blockchain technologies. Dubai even has one of the world’s first blockchain academies, where these technologies are studied in detail and ways of their application are being developed. Therefore, over the next 5 years, a significant increase in the use of blockchain is expected in various industries, including not only finance, but also public administration. In addition, it is a matter of economic benefit: attracting investments and improving the business environment,” explained Nikolai Kuznetsov. He also noted that the strategy for the development of blockchain technologies has a long-term character, so crypto investors may not be afraid that the loyal attitude of the Dubai government to this issue will suddenly change.

Results of government initiatives

According to the analytical company Chainalysis, the revenues of UAE crypto investors in 2023 amounted to $ 204 million. Bitcoin was the most popular. According to the forecasts of experts of the Statista platform, in 2024 this figure will reach $ 292.1 million.

The growth of the UAE-based Crypto Oasis blockchain system amounted to 13.3% in the first quarter of 2024. It consists of more than 2,040 companies concentrated mainly in the Middle East; 9.5% of the corporate sector consists of organizations specializing in real estate.

To date, in Dubai, it is possible to find projects of developers worth billions of dirhams, some of whose funds are placed on blockchain platforms. In turn, the process of tokenization of the real estate sector contributes to the formation of a more transparent and efficient environment for transactions.

Forecasts

As for the future of crypto payments in the real estate market, experts express quite optimistic forecasts, highlighting several key prospects:

Technology improvement. The development of the blockchain will significantly simplify transactions using cryptocurrencies and make them more accessible.
Improving regulations and increasing transparency. The new regulatory framework will clarify the use of cryptocurrencies, which will attract more conservative investors, help combat money laundering and identify the parties to the transaction.
Transformation of priorities. An increasing number of buyers, especially young ones, are actively using cryptocurrencies, which can make them one of the main investment tools.
The spread of innovation. More and more developers and agencies will accept payments in cryptocurrency in order to attract technically advanced investors.

The popularity of Dubai and the UAE in the implementation of crypto projects is increasing against the background of stricter legislation in other countries. According to Kaydan Stadelmann, technical director of the Komodo blockchain platform, the Emirates has become a more favorable environment for crypto investors than the United States. He himself moved to the UAE from the Netherlands due to Amsterdam’s growing distrust of cryptocurrencies. Komodo became one of the many companies attracted by the loyal conditions of the Arab state.

The main advantage of Dubai for crypto investors today is a loyal legal environment. Digital currencies are supported by the government here, and there is an innovative infrastructure. Dubai is also distinguished by high rates of economic growth and significant potential for return on investment. Compared to other major cities, for example, New York, London, Singapore, in Dubai, the conditions for crypto investors are more flexible and comfortable. In Europe and the USA, as well as in many Asian countries, government controls and reporting systems are more stringent than here. In the emirate, no one is trying to put excessive pressure on crypto projects, on the contrary, conditions are being created for their growth and development,” Nikolai Kuznetsov said.

Let’s summarize the results

Blockchain technologies are being actively introduced into various sectors of the Dubai economy, including the real estate market. The Government of the Emirate has launched the innovative Real Estate Blockchain Initiative platform and developed the Dubai Blockchain Strategy to regulate transactions using digital assets. Participants of crypto projects call the Emirates one of the most attractive areas for work due to the loyal policy of the authorities.

More and more developers are allowing you to pay for real estate using cryptocurrency. Bitcoin and Ethereum remain the most common types of it. Investors who want to make a deal with a developer who does not accept digital currency can always contact an intermediary organization. For a small commission, she will accept a crypto payment and transfer funds to the developer’s account in the traditional format.

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