If you amassed your Bitcoin wealth mining coins in 2008, you may be at a bit of a loss of what to spend it all on. Sure, you could order the odd pizza here and there, but you’d have to be a really big fan of dough, cheese and tomato to blow through your entire savings. What other option is there, than to cash out?
Baroness Michelle Mone and her partner Douglas Barrowman have another suggestion of how to blow your Bitcoin: their new £250 million Dubai property development. Due to complete in 2019, two apartment blocks comprising of 1,133 apartments are currently being built in the centre of the Science Park, and the first 150 are on sale now at a rate starting at $133,000, or £102,000.
What that is in Bitcoin is, awkwardly for a news piece about Bitcoin, hard to pin down. Between me first hearing about the development, meeting Mone and Barrowman and the website going live, $133,000 has ranged between 33 and 26.6 bitcoins. Earlier today, we were reporting on how Bitcoin had hit $5,000 for the first time – only to crash again shortly afterwards. So just how risky is the venture for the pair?
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“It’s real time, so we’re transacting with the paperwork at the point in time the Bitcoin is valued at on the day it sells,” Barrowman tells me when I sit down face to face with them at a hotel in London. “So we’re not giving a price over a three-day period because the reality is that Bitcoin moves by the minute. We could get to November, and Bitcoin could be at $2,500.”
Even this real-time conversion is not without very real risks, thanks to the speed that the blockchain works at. “It can take seven hours for something to go through the blockchain, but at the end of the day, we take the view that Bitcoin is a long-term hold for us, so if we’re left with some then so be it.”
“We’re Bitcoin owners ourselves,” chips in Mone. “We’re big fans!”
While Barrowman has owned a Bitcoin wallet for some time (he has a mentor to guide the way, he says), Mone describes herself as a learner – “new to the family”. Despite this, her enthusiasm for the currency is contagious: Mone’s own parents have even got involved. “My mum and dad are typical working-class Glaswegians, and they’ve got a little stash aside that means a lot to them. They have their bank book and they’ll never buy anything unless it’s in the bank book,” she says. “But my Mum has put quite a bit of her savings into Bitcoin.”
If people of that generation are buying into it, what does that say about Bitcoin?” she asks. “They got it straight away. It took them a while to get the mobile phone, but they got Bitcoin right away.”
The apartments themselves are being sold at around 15-20% below market rate, and promise a rental return of around 9% to investors. And while the pair would undoubtedly prefer the transaction to go through in Bitcoin as a proof of concept, they’re happy to accept the dollar value. “There’s an argument to say that, with all the risk involved, there should be a premium for taking Bitcoin,” comments Barrowman. “But I’ve not taken that view – I’ve taken the view of making it a level playing field.”
The Bitcoin-first approach could certainly lead to a change from the stereotypical Dubai property investor – is this a conscious decision? “I think it’s a coincidence,” says Barrowman. “I think the reality is that there’s a lot of people out there who’d like to diversify their profits made and holdings in crypto into something more conventional – whether it’s buying a yacht or a property, people are looking for ways to deploy the gains that they’ve made really.”
And while there’s an argument to say that, given that Bitcoin prices are tied to the dollar and the pair will accept dollars, dirham or Bitcoin, that this isn’t that big a deal. After all, there’s nothing stopping an investor buying Bitcoin specifically for the purchase, or indeed for a Bitcoin owner to cash out and buy property conventionally. Yet you get the impression from talking to them that there’s something more here than just an appealing press release. “I believe Bitcoin and cryptocurrency [are] here to stay, and therefore by endorsing this space and allowing people to deploy capital into a fixed appreciating asset is innovative and breaking new ground,” says Barrowman.
The ability to break new ground is, currently, somewhat hampered by local law. How Bitcoin is treated varies from country to country, and while the transparency of it could theoretically do away with the money-laundering checks of standard property purchasing, for now, that’s just not an option. The front-end is Bitcoin, but the back-end is normalised conveyancing using Dubai laws and regulations: 40-day escrow as it has been for a long time.
“Wouldn’t it be great if in three years’ time we were sat here we hope to be sitting here, saying we sent funds and it happened in seven seconds, the blockchain recorded it instantaneously, you have title deeds passed and it’s a completed transaction,” muses Barrowman. “In that case, you’re in a whole new world where lawyers don’t exist anymore, and the function of banks is called into question and they have to reinvent themselves.”
It’s not there yet, obviously, and how well it works will impact on others. To begin with, the pair is only selling 150 apartments this way, and will release others after they sell – but they’ll be priced according to the initial demand. “I really believe these 150 will sell out at the speed of light,” Mone says.
The UK government has thus far largely ignored Bitcoin, but this move could see the currency being taken more seriously in Westminster – especially as Michelle Mone took a seat in the House of Lords back in 2015. Her experience of the medium could give valuable insight to the government as it considers how to handle cryptocurrency. “We haven’t really spoken about it that much – I’ve been keeping it a secret until today,” says Mone, on her conversations in the Lords. “But I have spoken to some of my closest friends, baronesses and lords, and they’re excited about it.”
If nothing else, it’s an interesting change of pace for a woman who made her way in the world through lingerie as the founder of Ultimo. “This is easier than building a G size bra – which takes 38 components,” she quips. “I know there’s a lot of components in a terrace, but I think it’s far easier.”
You can browse the Aston Plaza Bitcoin plots here.
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