(New York, NY) — Cryptocurrency has made its way to the NYC real estate industry. The New York Post released that real estate developer, Ben Shaoul, of Magnum Real Estate Group, is planning to sell two Upper East Side apartments using bitcoin.
These transactions aren’t cheap. The condos are located at 389 East 89th Street. One is a studio that is up for sale at a whopping $875,000, and if that wasn’t pricey enough, the second condo is a one-bedroom for $1.48 million.
This isn’t the only slice of NYC real estate crypto-crazed investors are getting a piece of. According to CNBC, a group of investors that go by the name “Chimera group” have made a $375 million cryptocurrency offering, proposed as the “Plaza Token” in an attempt to own part of the NYC landmark, the Plaza Hotel. While the deal is not definite, Chimera’s principal investor, Shahal Khan, and the majority owner of the Plaza Hotel, India’s Sahara Group, have been discussing the possibility of the purchase.
Is it worth the risk?
While bitcoin and other cryptocurrencies took the investment world by storm, many regulators and investment advisers are firmly against it. Why? This new electronic payment system is not secure.
According to The Washington Post, the recent drop in the price of many cryptocurrencies, including bitcoin, indicates how unreliable the payment method can be. The continuous drop, as well as the rise in value, have no rational basis. In fact, bitcoin has lost half of its value since surging 1,300% last year.
Since the fluctuation of bitcoin has proved to be risky, The Commodity Futures Trading Commission, an independent agency of the U.S. government, created an online resource at cftc.gov/bitcoin in an attempt to warn prospective investors.
So, why take a stab at real estate? More importantly, why would the real estate industry take such a risk?
Shaoul, while defending his plan to sell the Upper East Side apartments, told NBC New York, “We’re at a huge turning point for real estate to take advantage of the new technology out there for our customers, and I’m excited to be at the forefront. Real estate professionals should be open to the freedoms allotted with cryptocurrency and the platforms available that handle these transactions safely and securely.”
While Shaoul plans to use BitPay as a third-party service to accept the bitcoin payment and convert it to dollars, he is better off making the transaction sooner rather than later. According to CNBC, bitcoin dropped below $8,000 in February and is anticipated to continue to fluctuate in value in the months to come.