Tenants, landlords and property investors in Dubai have reservations about the use of cryptocurrencies in real estate transactions, according to a new survey.
“There seems to be an interest in knowing the worth of a property in cryptocurrencies, but consumers do not trust using these for property transactions at the moment,” said Haider Ali Khan, chief executive of Bayut.com.
Only 3 per cent of those questioned in the survey, by Dubai property portal Bayut.com said they were interested in using digital currency to buy, sell or rent property.
The findings compound recent criticism of Bitcoin, Ethereum and other cryptocurrencies, with the World Bank's group president Jim Yong Kim comparing them to illegitimate "Ponzi schemes" last week.
Just 5 per cent of respondents to Bayut’s survey – which was conducted among its 170,000 Facebook followers and 355,000 email subscribers, although Bayut refused to disclose the number of participants – said digital currency was the best investment out of cryptocurrency, real estate, gold and stocks, whereas the majority (52 per cent) said real estate was the best option.
The vast majority (79 per cent) of respondents said they did not believe cryptocurrencies were a “good investment” at all, while 21 per cent said they did.
There was a more even split when it came to curiosity in knowing a property’s cryptocurrency value – 48 per cent said they would be interested in knowing how a property was valued in cryptocurrency, versus 52 per cent who said they would not.
Of the total respondents, 31 per cent described themselves as “property investors” either current or prospective. Almost half (49 per cent) were tenants in Dubai, 9 per cent were landlords, 7 per cent were agents, 1 per cent were developers, and the rest were “other”.
The share price of one of the biggest cryptocurrencies, Bitcoin, plummeted in the past week reaching three-month lows below $6,000 on Tuesday. It has since rallied to above $8,000 on the Luxembourg-based Bitstamp exchange on Thursday, but its drop alarmed investors. It was at $8,749 on Friday afternoon.
The UAE’s capital markets regulator the Securities and Commodities Authority issued a warning to investors last week week about the risks of initial coin offerings (ICO), the cryptocurrency version of public listings, citing high volatility, lack of regulation and misleading offers.
The UAE Central Bank issued a warning last October, reminding investors that no licence was issued for digital currencies in the country, and that the bank itself is not involved in regulating them.
“The stark reality is that there is a long way to go when it comes to actually using cryptocurrency in real estate transactions,” Bayut.com said. “A whopping 97 per cent of people who took our survey said they would not be open to buying, selling or renting property in the UAE using cryptocurrency.
“At the beginning of 2017, Bitcoins were priced at a meagre $900. Twelve months later, it touched nearly $20,000 – a meteoric rise. But the story doesn’t end there; today it has come down to a more modest [$8,000], while tomorrow it may rocket or plummet," he said.
“Evidently, cryptocurrency is still at a very nascent stage and will be prone to several ups and downs, scrutiny and critique.”