Dubai: Want to pay off the annual rent using bitcoins? Then make sure you have enough to pay off the whole of it at the start of the contractual period.
“Otherwise we would not be able to accurately estimate the amount of bitcoins needed at the outset of the contract — that is due to the fluid nature of the bitcoin currency,” said Firas Al Msaddi, CEO of fam Properties. “It would be unfair to the landlord if the bitcoin value goes down … and likewise, to the tenant if it goes up.”
The brokerage firm made quite a stir on the opening day of Cityscape when it announced that some of its clients were quite taken up with the possibility of settling their rental obligations by passing out bitcoins, which operates as a digital currency and is not bound by any sovereign attachments. These were apartment owners for a “limited number of apartments at City Walk”.
Fam Properties is all set to hit the “Go” button once there are clear regulatory guidelines.
The regulatory environment for digital currency is still in the infancy stage, and much will depend on this to take bitcoins into real estate transactions.
“It is true that at any given moment the value of bitcoin can vary considerably,” said Al Msaddi. “When entering into an agreement of bitcoin payment, the landlord and tenant must be aware of the possibility that one of them may lose if there is a significant change in the value of the currency during the day of payment.
“However, the established mechanism is very instant — we do not expect any considerable ups and downs of the bitcoin value during the lead-time of closing a leasing contract.”
But getting UAE consumers — so used to cash and plastic — to change their ways will take some doing. Of course, there will always be some early adopters swayed by the sheer novelty of it all.
There are many exchange houses where bitcoins can be converted to cash, and one is currently available in Dubai.
“We are not trying to make transactions difficult,” said Al Msaddi. “We are simply offering extra alternatives to cash payments. There is absolutely no obligation to use our bitcoin payment scheme.
“Customers wishing to pay in Bitcoin are required to exchange the corresponding amount of the crypto-currency in the day of purchase, to the dirham value of the annual rent. For instance, if one bitcoin is worth Dh10,000 and the annual rent is Dh100,000, the customer would have to transfer 10 bitcoins to the landlords’ bitcoin wallet from their own.
“Alternatively, the customer can send us the amount directly from an exchange house.
“This is obviously a new technology for us, but first, we will conduct a pilot study to gauge the level of interest from clients, especially tenants. If the response is positive, we will then seek the necessary approvals from the relevant authorities and consider the suitable launch options.”