The Fintech Effect

Real estate project in Dubai to be the 'first major development where you can purchase in bitcoin'

Key Points
  • British entrepreneurs Michelle Mone and Doug Barrowman have launched a bitcoin-priced real estate development in Dubai
  • The project spans more than 2.4 million square feet
  • An initial tranche of 150 apartments will be sold in bitcoin in a world-first
  • Studio apartments will be sold initially at a starting price of 30 BTC — worth $133,918
Property development in Dubai first to be priced in bitcoin
Property development in Dubai first to be priced in bitcoin

A 250 million pound ($325 million) luxury development has been launched in Dubai — and the people behind it don't mind if you pay in bitcoin.

Announced Wednesday by British entrepreneurs Michelle Mone and Doug Barrowman, Aston Plaza and Residences spans more than 2.4 million square feet and is split across two 40-storey residential towers.

Its developers claim that it will be the "first major development" to be priced in the virtual currency bitcoin.

"Being a designer for 21 years, it's a real passion of mine as the design side, and it's great to be partnering up together as well to launch this. And this is the first major global development where you can purchase in bitcoin," Mone told CNBC in an interview last week ahead of the announcement.

"Previously there's been an apartment here and there's been a house here and there, but never a £250 million development, so it's really exciting to be involved in."

Mone founded the lingerie brand Ultimo in 1996 through her company MJM International. She now owns the interior design firm Michelle Mone Interiors, which will be responsible for building main walkways and reception areas.

Aston Plaza and Residences

She is also a lawmaker in the U.K.'s upper chamber of parliament, and was appointed by former Prime Minister David Cameron two years ago.

Why bitcoin?

Mone's partner Barrowman, who is chairman of the Knox Group of companies, said that the pair chose bitcoin as part of the virtual token's emergence as a more "mainstream" means of investment.

"I've been invested in the crypto world for the last couple of years really, and it's a sector I've watched grow and emerge," the venture capitalist told CNBC in an interview.

"So I see it coming to that stage where the early adopters are giving way to a more mainstream application of cryptocurrency, and therefore it's a logical extension to take land and buildings and effectively offer people the opportunity to pay in cryptocurrency or bitcoin rather than just fiat currency."

Barrowman said the "crypto world" would warm up to the property development as investors who don't wish to live in the property can receive a nine percent return on their investment after completion.

"And that finds favor with how the crypto world operates, they like to be rewarded discounts, on ICOs (initial coin offerings), to allow them to buy into things. And I just think it's quite groundbreaking what we're doing," he added.

It's the currency of the future.
Michelle Mone
British entrepreneur and parliamentarian

Several governmental authorities have expressed concern over a lack of regulation for cryptocurrencies.

On Monday, the People's Bank of China (PBOC) was just one of several Chinese authorities to announce a clampdown on initial coin offerings (ICOs). ICOs are used by start-ups to raise funds by flogging off new digital tokens.

But, addressing regulatory concerns about the virtual cash, Mone said that she would not be getting involved in bitcoin if it wasn't a trustworthy investment.

She said: "It's the currency of the future. And I think because everything is logged and registered, everything's transparent, that I wouldn't be getting involved in it — especially from the House of Lords element, I'm a baroness — so I wouldn't be getting involved in it if it was a kind of 'dodgy' industry."

Aston Plaza and Residences

She referred to several laws which have been put in place to try and regulate cryptocurrencies. The Isle of Man, a small independent island between England and Ireland, introduced its own legal framework to force crypto businesses to fall into compliance with anti-money laundering (AML) laws in 2015. Meanwhile, the U.S. Securities and Exchange Commission said in July that federal securities laws could apply to token sales.

'Not a gimmick'

Mone refuted the idea that the bitcoin-priced development was a "marketing gimmick".

"It's not a gimmick. These people do want to buy things with their bitcoin," she told CNBC Wednesday morning.

"So we're here, they can buy a studio apartment, a one bedroom, a two bedroom, they can go online right now … and buy that apartment within minutes."

She added: "These people have had bitcoin right from the very start, years ago, and at the start of the year in January it was (worth) $800 a bitcoin. Now, yes it's dipped slightly, but it's around … $4,500 at the moment."

The hit a low of $4,037 on Tuesday, down 20 percent from its all-time high of $5,000 over the weekend.

Bitcoin priced property development 'not a gimmick,’ says UK entrepreneur
Bitcoin priced property development 'not a gimmick,’ says UK entrepreneur

It managed to make a recovery Wednesday, currently trading at $4,519, according to CoinDesk's price index.

Project to be completed by September 2019

The studio apartments will be sold initially at a starting price of 30 — worth $133,918.

It includes more than 1,000 apartments and a shopping mall, and is due for completion by September 2019.

Transactions will be processed by cryptocurrency payments platform BitPay, which provides payment tools to Microsoft and billionaire Richard Branson's space endeavor Virgin Galactic.

"These property purchases can now happen in minutes from anywhere in the world with the speed of sending an email," BitPay CEO Stephen Pair said in a statement on Wednesday.

"We are pleased to partner with Knox group of companies in this exciting first for Bitcoin and for property payments."