Could Crypto Be on the Rise for CRE Transactions?

By Senior WriterPublished On: March 15, 20224.4 min read

Crypto is on the rise, whether it’s Bitcoin or Ether. As capital is flooding in, a number of major tokens are pushing the overall crypto market up to $2 trillion in market value, according to Coin MarketCap.

Big tech is jumping onboard, too. Google is developing a blockchain, aiming to capitalize on the crypto economy. Venture capitalist Andreessen Horowitz recently announced that he plans to raise $4.5 billion for blockchain firms.

That trend also means that buying and selling property with blockchain is going to eventually become the norm. In Miami, a penthouse sold for $22.5 million with crypto, the most expensive crypto real estate sale to date.

Buying property with crypto is the next step for blockchain-based payments, which are moving into the market. Some crypto traders are using it to buy and sell real estate, which is fueling a hot market. The crypto-based smart contract is making real estate transactions faster for property transfers as well.

But in a market where it isn’t mainstream as of yet, one of the drawbacks is property sellers not willing to accept crypto as a form of payment, especially with the fluctuations of the market impacting the value of crypto. There is also the risk of hacking.

Still, realtors are quickly catching on. They’re making it easier for people to buy and sell with crypto, or even use only a portion of the sale for crypto, with the rest being cash. BitPay is one way to do a real estate transaction, from buyer to seller, with the funds sent to their crypto wallet.

According to Adam Redolfi, a Managing Partner and International Real Estate Investment Consultant at Barnes International Realty, blockchain accelerates the usual processes of the real estate market.

“As users have access to all the information stored in the blockchain, they save a considerable amount of time in obtaining data relating to a property or land; title deeds, land registry, technical information and surveys, co-ownership information, all of it becomes available 24/7, with real-time data and instant validation,” he recently wrote in Forbes. “This technology is a real revolution for real estate professionals and investors alike.”

One company that is accepting crypto as a form of payment is Pacaso, which sells single-family second homes, or vacation homes, and sells them fully furnished. The homes are managed through their SmartStay app.

On the commercial side, firms like Presidio Property Trust Inc., a REIT, are offering the option to buy and sell with crypto for CRE properties. They accept several cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE) and Litecoin (LTC), from their commercial tenants via BitPay.

“We believe that these additional payment options will be attractive to some of our current and prospective tenants, especially in new, expansion markets,” said Gary Katz, Senior Vice President of Asset Management at Presidio. “This is another way that Presidio Property can differentiate itself as a forward-thinking landlord.”

For example, on Condos.com, buyers can get money back, both cash and crypto rebates. As their website explains to potential buyers: “Once the transaction is completed, we will distribute your cash or crypto rebate as directed by you. Additional rebates are available for referrals and as part of our Condo Buyers Club.”

Another firm on board with crypto is Gaucho Group Holdings, Inc., which has a portfolio of luxury brands and real estate. The company has recently started accepting crypto at their property, Algodon Wine Estates, a luxury real estate development with wine vineyards, a wellness resort with culinary and sport facilities. The property is located in the Sierra Pintada Mountains in San Rafael, Argentina.

“The acceptance of digital currency as a medium of exchange continues to gather momentum as, among other causes, investors across the globe witness the impact of central bank actions on currency valuations and as a result are seeking alternative stores of value,” said Scott Mathis, CEO and Chairman of Gaucho Group Holdings. “At the same time, investors are beginning to recognize the opportunity for diversification that luxury real estate in Argentina presents. This cryptocurrency-based transaction represents the first of what we believe could be many more such transactions as some cryptocurrency holders look to deploy some of their holdings into various hard assets around the world.”

For Thaddeus Wong, Co-Founder and Co-CEO of At Properties, a Chicago-based real estate firm, their firm has been working with crypto for the past eight years, recognizing crypto’s power with mortgages, title and security.

“We’re looking at how we’re going to introduce blockchain into the industry,” Wong said. “We plan on being the leader in that. We’re not the first, as there are other companies doing it well right now, but we’re one of the first to introduce blockchain into the real estate transaction.”

As it stands, it isn’t mainstream enough — from an educational perspective — for everyone to adopt it just yet.

“Maybe in the next five to seven years, but it isn’t going to happen in the next year or two,” Wong said.

Expect to see it grow by 2028, however.

“You’ll see some one-offs, like when $6 million homes are closing within a year with blockchain, but it’s going to be awhile before there’s that significant adoption,” he added. “I don’t see it gaining steam anytime soon, until the consumer is far more aware.”

Related Articles

Related Articles