Real estate: In Spain, the real estate market has been booming since November 2021. It grew 400% as the stock market falters under pressure from the pandemic, inflation, and Russia’s invasion of Ukraine.
Since the 1930s, almost every country has experienced a reduction in actual stock returns during periods of high inflation, especially in developing economies. As reported by the Wall Street Journal earlier this month, Joe Quinlan, head of CIO market strategy for Merrill and Bank of America Private Bank, said, “This is going to be a revealing quarter in terms of who’s at risk of these inflationary pressures.”
The S&P 500 fell 7.4% at the beginning of 2022, and the tech-focused Nasdaq is down 14% year-on-year. To combat falling returns, investors often turn to bonds. However, even bond prices are now falling, leaving investors in a quandary.
Unless they turn to an asset class reserved mainly for conservative investors: real estate.
Spain is becoming a trailblazer for crypto property purchases
Spain is leading the way, with the real-estate market growing 400 percent since Nov. 2021. Interest in cryptocurrency property purchases has been rising, especially in the last two months. The head of Inviertis Properties in Mataro, Spain, confirms this, saying that investors “are withdrawing everything they had on the stock market and are investing in real estate to preserve their assets, a situation that has worsened since the Russian military invasion in Ukraine.”
Early investors in cryptocurrencies have accrued significant wealth. This can be used to diversify their investment portfolios with more assets whose supply and demand are stable. “You turn a risky asset into a conservative one,” he added. He also admitted that there are still obstacles, such as how to set the property price in bitcoin, how to perform the transaction, and how to legitimize the deal with the government treasury.
Real estate: How are property payments made in crypto?
The purchase of property depends partly on the seller being willing to receive crypto payments. Some sellers accept 100 percent cryptocurrency payments, while others prefer a mix of cash and crypto. This will require bitcoin to be sent from one crypto wallet to another. However, according to BitPay, cash payments will still be needed to pay intermediaries and government departments.
Vicenç Hernández Reche, adviser to Perez’s company and the head of mortgage formalization and management company Tecnotramit, concurs. “It is one thing to use them as a speculative investment, like buying dollars or gold, and quite another to do it as a currency for exchanging real estate.” He said its use and adoption by intermediaries, financial entities, notaries, and property registrars, among others, is expected to grow. “We will be able to see a more widespread use of cryptocurrencies.”
For those looking to invest in real estate using crypto, remember that due to the cryptocurrency market’s volatility, real estate prices will remain unchanged in local currency. The buyer also has to pay any capital gains that arise from selling bitcoins during the transaction.
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