Only a few years ago, cryptocurrency-for-property exchanges seemed far-fetched and even impossible. Even though it's not very common in Dubai yet, many developers are making it a reality.
In Dubai, cryptocurrency is becoming increasingly commonplace as a payment method for properties, and nowadays, cash and financing aren't the only ways of investing in Dubai's thriving real estate market. By regulating virtual currencies, the newly announced crypto laws are set to further strengthen their standing, and their regulation is certain to boost industry stakeholder confidence in the currency market.
The current state of virtual fiats
Note: As of right now, crypto transactions still require the element of cash to seal them.
There may be many questions running through your head, like for example, is it possible to swap physically non-existent money for a tangible asset, a home? The answer is yes, but with a slight detour. Currently, cryptocurrency property purchases in Dubai are fundamentally cash-based transactions.
It is actually a crypto exchange or brokerage firm that converts a cryptocurrency into cash first. Transactions begin once the conversion has been completed. Currently, virtual currencies cannot be used as a method of payment within the UAE due to a lack of approval by the Central Bank.
Dubai has however taken proactive steps in this realm, having enacted Law No. 4 of 2022 and establishing Dubai Virtual Assets Regulatory Authority (VARA) to lead Dubai into a future in which virtual assets such as crypto and non-fungible tokens (NFTs) will be regulated.
As of now, the process of buying a property is still more similar to using a traditional loan or cash to buy a property than engaging in a sci-fi-inspired virtual world transaction. Developers are offering these still-novel methods more often, but they still have a long way to go before they become the norm.
Nevertheless, this is not to say it will never come to pass: we are increasingly moving towards virtual assets and utilizing them for transactions.
Government Initiatives on Cryptocurrency
Several blockchain initiatives have been launched by the UAE government, including the Dubai Blockchain Strategy in 2016 and the Emirates Blockchain Strategy two years later, which is supposed to work until 2021. Half of all transactions are expected to go through the blockchain platform. Time and resources are saved through the use of new technologies including AED 11B (USD 2.99B), 398M documents yearly, and 77M working hours. The use of blockchains will be used to protect the data transmitted during digital transactions.
Several of these projects will help the country to become more efficient, develop industrially, and lead internationally. Dubai's prosperity will be enhanced by blockchain-based strategies led by Sheikh Mohammed bin Rashid Al Maktoum.
The business will be conducted more efficiently and without bureaucracy by integrating the cryptocurrency system and blockchain into economics. Using blockchain technology in real estate, the Dubai Land Department (DLD) is going to create a registry of every real estate property in Dubai.
A government announcement was made in 2017 about a cryptocurrency called emCash that will be created by Credit and Jbject Tech. A cryptocurrency-based app called EmPay will be launched as well, in which residents can purchase public utilities and services with cryptocurrency.
Successful blockchain initiatives include
1. Smart Dubai: Creating the city of the future, this project aimed at transforming the city into the city of the future by leveraging blockchain, artificial intelligence, interactive dashboards, big data, and smart contracts.
2. Many Dubai banks use blockchain technology, including Emirates NBD and Mashreq Bank. The use of new technology improves security for clients, reduces fraudulent checks, and creates an intellectual platform.
3. Government services can be paid through Dubai Pay App. Smart Dubai launched the app in 2013 and it is under the control of the Dubai Smart Government.
4. Emirates Airlines, one of the biggest air companies in the world, plans to integrate blockchain technology into its Skywards app, launched in 2019. Blockchain technology will help increase payment security and reduce fraud.
5. The DP World logistics and navigation company operates worldwide. By utilizing the blockchain system, a number of processes, like digitalization and document protection, registration simplification, and the elimination of redundant processes, have been advanced.
The process to buy properties with cryptocurrency in Dubai
1. For real estate transactions using cryptocurrency in the UAE, you are advised to work with companies that are familiar with such transactions. Furthermore, the company must be licensed by the Dubai Economic Department (DED) in order to provide financial intermediaries. Also, make sure the company has a flawless reputation in digital markets.
2. A trade can be conducted in any cryptocurrency you want, such as Bitcoin, Ethereum, USDT, and other digital currencies at the exchange rate that was determined at the trading company's central office during the transaction. According to the current cryptocurrency rate, the price of a transaction is formed, as well as the commission amount to be discussed with the company beforehand.
3. Getting cryptocurrency is quite easy. If the buyer does not yet have a cryptocurrency wallet, they should open one. A wallet can be registered by an individual or a legal entity. It usually begins with the choice of the property and then a discussion of terms and conditions, regardless of the method of payment. During this time, a buyer and seller discuss the key aspects of the deal that will later be written into the purchase and sale agreement. Upon choosing the property, the AED price is converted into cryptocurrency, for example, Bitcoin. Upon signing the contract, the amount written in the contract cannot be altered. Changes in exchange rates are not the responsibility of either the seller or the buyer.
4. After this, the buyer must send the cryptocurrency amount to a trading company's digital wallet and settle the commission amount. Following this, the buyer is given a check-in AED, to transfer the funds required to the escrow account for the selected property, or to the seller's account, if the transaction is for an off-plan property. If you intend to buy directly from the developer, you will need to sign a special contract from the third party. The check is then given to a developer, who then notifies the buyer that the funds have been transferred. If a buyer is interested in a completed property, the unit can be paid after receiving the cheque-in AED. The real estate agent will then handle the transaction and assist with obtaining the Title Deed.
Note: "Despite the fact that you will be purchasing property with a cryptocurrency, you won't be able to pay for it directly. According to the Central Bank of the UAE, all transactions on the territory of the country must be conducted using the national currency, the AED (dirham). Then, you must transfer your digital currency to the trading company and wait for a cheque to arrive with the agreed amount with which you can purchase the property."
"It is important to note that, due to rate fluctuations, either the purchase contract or the rental contract can become unprofitable for one of the parties and, as a result, the contract can be dissolved. Along with the brokerage company's commission, a buyer must register with the DLD and pay a 4% registration fee and a 2% commission for a real estate agent's services."
Documents Required to Buy a property with cryptocurrency:
In order to purchase a property with cryptocurrency, you will need the same documents as for traditional monetary transactions. Firstly, you will need a preliminary agreement in English or Arabic. Then, you should seek the assistance of a professional real estate agent, who can help you choose the property, collect documents, and complete the contract. If you've never spoken or used Arabic before, you will have a challenging time understanding the terminology. When this happens, a specialist can clarify any confusion a buyer might have. It's important to talk about aspects like the correct address, payment plans, and responsibilities of the parties when buying or renting a property.
To complete the transaction, you will need the following documents:
1. An international passport
2. A valid identity document
3. Proof of your residential address
4. Contact information
5. If your representative is conducting the transaction, a power of attorney is needed.
Conclusion
Dubai is one of the first places in the world to offer Bitcoin, Ethereum, USDT, Litecoin, and other digital currencies as a means to buy, sell, and rent real estate. Apart from Emaar Properties, numerous other developers like Select Group, Dubai Properties, DAMAC Properties and Meraas also offer crypto-based projects. It is important to note that you must work only with licensed real estate agencies, real estate agents and cryptocurrency transaction management companies with an excellent reputation if you are making such a transaction.
Also Read:
Earn While Run.!! How? Let's Find Out.!!