The Super Rich in China are buying Properties Abroad Using Bitcoin
A handful of wealthy people in China are acquiring real estate abroad using digital currencies such as bitcoin.
Take for instance Guo Hongcai, a beef salesman from the Shanxi province, who adopted bitcoin early on in his life. Hongcai moved a portion of his wealth somewhere else by selling 500 bitcoin in the United States and then used the proceeds to purchase a 100,000-square-foot mansion in Los Gatos, a 90-minute drive from San Francisco, California. He also bought Rolls-Royce located in the driveway close to a small chives garden.
Hongcai described his secondary abode as the “Mansion of Chives,” because the vegetable is also Chinese slang for crypto investors who are susceptible to huge sell-offs. “It’s very normal to sell bitcoin in the U.S. After selling bitcoin, you can just buy anything you want,” he said.
A newly minted crypto millionaire, he is trailing the footsteps of his predecessors in diversify his holdings by turning to real estate markets. Either the likes of Hongcai purchase property directly with crypto entities or obtain virtual currencies without going through a financial institution.
Approximately one-third of their prospective clients originate from Asia including Chinese investors wanting to tokenize property rights through securities brokers in Hong Kong, according to the founders of an American crypto real estate startup who spoke on the condition of anonymity.
Hong Kong does not require certain taxes and documentation for any real estate acquired in their jurisdiction. The number of Chinese foreign investment, usually done through Hong Kong brokers, has been rising for years.
“The requests we have from them start at $50,000 or $100,000 up to, the latest one was $3 to $4 million for Silicon Valley,” Natalia Karayaneva, chief executive officer of crypto-powered real estate marketplace Propy, said.
“We’re seeing that more and more people are willing to buy properties with cryptocurrencies because it’s getting easier to get their money out of the country using bitcoin, rather than establishing a bank account based in Hong Kong and getting their money out of the country using business channels,” Karayaneva explained.
Several blockchain enthusiasts are purchasing second houses or investment properties that resulted in the increase of sellers accepting direct payments using digital currencies from international clients.
Chinese buyers are barely the only ones buying properties using virtual currencies. Last year, Europeans used bitcoin to acquire luxurious properties in Aston Crypto Plaza in Dubai. “In Beijing, only last year they saw a 40 percent rise in price. Historically, real estate investors from China are very active abroad because their own property market is going crazy,” Karayaneva said.
The US and the United Kingdom are the most popular locations for real estate properties specially financial technology hubs including the Bay Area in California and London. “They were mostly interested in residential properties next to good education, like Stanford. Also, they want to diversify. They want to have parts of their assets abroad in more stable countries,” she added.
China takes about half of the traffic to Propy’s website; specifically, that’s 25,000 out of the 50,000 monthly views.
It is more common for seasoned bitcoin investors in China to change virtual currencies into cash to purchase properties using the proceeds of the cyrpto sales, according to Roy Dekel, CEO of SetSchedule. “We have noticed a drop in Chinese interest, but certain cities like Los Angeles, San Francisco, and New York remain strong. The ultra-wealthy Chinese have used this source as a diversification of investment,” he said.
The Chinese government has intensified its crackdown on cryptocurrencies. Moreover, a Reuters report said property development prohibitions in the country continue to become more rigid. But a New York Times report in January noted that China’s housing market is akin to a casino.