Crypto fanatics and their love of real estate

For an industry that values ​​digital assets, some of its most affluent supporters are actually very keen on real assets, particularly real estate.

If a man’s home is his castle, then cryptocurrency has helped build some mighty impressive for its early adopters and most successful players.

Despite the current so-called “Crypto Winter”, some of the biggest names in the cryptocurrency industry snapped up valuable real estate assets from Seoul to Singapore, the Bahamas to Dubai, during the boom days.

During his heyday, the founder of Terraform Labs and the infamous face of algorithmic stablecoin TerraUSD and sister token Luna, Do Kwon, once lived in Singapore’s posh Nassim Road neighborhood, one of Singapore’s most exclusive residential enclaves.

Dubbed the “Beverly Hills of Singapore” by the South China Morning Post, Nassim Road is a quiet avenue equivalent to Singapore’s billionaire mile, with only millionaires priced out of this exclusive zip code and dominated by “good class bungalows” or “GCBs” for short.

Singapore’s most sought-after housing type, GCBs are officially classified by the government and require land in excess of 15,000 square feet and subject to strict rules on their built-up area as well as location to qualify.

Although there are some condominiums on Nassim Road, which is also surrounded by embassies, at the height of his influence, the chosen residential district suited Do Kwon, who publicly claimed to have led a “frugal” life.

Back home in Seoul, Do Kwon lived in an equally exclusive and exclusive apartment in Galleria Foret, in Seoul’s posh Seongdong district, on the east side of the capital.

For the uninitiated, Galleria Foret is not only home to the former crypto-rich, it also has the distinct privilege of housing some of South Korea’s biggest celebrities, including Kim Soo-hyun of the Netflix hit “It’s Okay to Not Be Okay” and G- Dragon from the South Korean idol group “Big Bang”.

Encased in luxury in two soaring 45-storey towers overlooking the Han River, and overlooking Mount Bukan and Mount Sorak, apartments at Galleria Foret start between US$3.5 million to US$5.1 million, making it one of the most expensive places to live in. Seoul.

Can’t afford to buy a unit in Galleria Foret?

Anyway, leases start at just US$30,000 a month, a small price to pay considering that Galleria Foret’s interior was designed by renowned French architect Jean Nouvel, and its gardens by Italian landscape architect Mario Venturi Ferriolo. Galleria Foret made headlines recently when an angry investor, who reportedly lost US$3.2 million from the implosion of TerraUSD and its sister token Luna, somehow managed to breach security at the high-end apartment complex and knock on the door of Do Kwon’s home, even though The Terraform Labs founder was not there.

But Do Kwon is hardly the only “Crypto Bro” with a penchant for prime real estate, as the liquidation of Three Arrows Capital, or 3AC as it’s better known, one of the most iconic cryptocurrency hedge funds, revealed its almost insatiable appetite for real estate. by the now elusive founders.

At the height of 3AC’s fame and fortune, co-founder Su Zhu once tweeted that he was “thinking about buying all the good class bungalows in Singapore and turning them into parks (and) regenerative agriculture.”

And while Zhu bought a few GCBs, in addition to many other “regular” bungalows, a townhouse and shophouses in Singapore, one of the most expensive cities in the world for real estate, he seemed quite content to call far more “modest” digs home.

Although Zhu’s purchase of a two-storey, six-bedroom GCB in the popular Yarwood area of ​​Singapore for US$35 million made headlines, the 3AC co-founder actually lived in a far more “pedestrian” US$5.25 million “cluster bungalow” at Goodwood Grand.

“Cluster bungalows” are also known as “strata-landed housing”, private property that is built in groupings that are relatively close to each other and share common facilities.

However, sharing a swim with a neighbor was not the case for Zhu’s freehold Goodwood Grand cluster bungalow, as it came with its own private swimming pool, so he and his family didn’t have to take a dip with uninvited guests.

Located along Balmoral Road, an exclusive property just a 5-minute drive from Singapore’s famous shopping belt Orchard Road, Goodwood Grand is a 73-unit property development that includes a 65-unit residential block and was completed in 2017.

Zhu is also believed to have owned at least one other GCB at Dalvey Road, another high-end enclave in Singapore, where a new two-storey house with basement, loft and swimming pool was expected to be completed next year.

Despite making his fortune in digital assets, property title searches reveal that Zhu appreciated real assets, having bought no less than three bungalows from 2019 to 2021, worth an estimated $60 million in total.

While Zhu was happy to make Singapore his headquarters, another crypto superstar was running a multi-billion dollar cryptocurrency exchange without one.

Binance, the world’s largest cryptocurrency exchange by market capitalization, has long maintained that it has no global headquarters, even as founder Changpeng Zhao, or CZ as he is better known, had no reservations about calling Dubai home.

When Zhao first heard about Bitcoin in 2013, he sold his apartment in Shanghai to finance the purchase of his Bitcoin wallet.

Fast forward to the present, and Zhao owns no less than two properties in Dubai, which is fast becoming a haven for the world’s crypto elite.

As well as an apartment in Dubai’s glamorous Jumeirah district, which is within a stone’s throw of the 160-storey Burj Khalifa skyscraper, Zhao also says he has bought a mansion in the city, believed to be in the same area and estimated to be worth around 2.8 million dollars.

Still, not all of the biggest names in crypto are looking to buy, with some quite happy to rent as well.

Take, for example, Sam Bankman-Fried, the owner and CEO of FTX, one of the world’s largest cryptocurrency exchanges and a leader in derivatives, who, despite a fortune estimated in the billions, shares a penthouse at the posh Albany Resort in New Providence, Bahamas, with around ten or more roommates.

Rentals at the ultra-exclusive Albany Resort aren’t exactly cheap, starting at US$3,000 a night for a villa, while those looking to buy must shell out at least US$5 million for entry-level digs that can go as high as USD 75 million at the extreme end of the spectrum.

Bankman-Fried is willing to spend on its employees, however, and is shelling out about $60 million to break ground on a new office building expected to house at least 1,000 workers along the coast of pristine white sand beaches and azure waters of the Bahamas.

While the “Crypto Bros” may love real estate, and it seems like a good investment in an inflationary environment, Bankman-Fried’s approach may make the most financial sense.

Because real estate is almost never paid for entirely in cash, the threat of higher interest rates undermines some of the allure of real estate.

With the US Federal Reserve aggressively raising interest rates to curb the fastest rate of inflation in more than four decades, higher borrowing costs are undermining the value of real estate both as an investment and as a hedge against higher prices.

And while a trophy GCB (or two) is good for bragging rights, they can be extremely difficult to unload when their sellers need liquidity as quickly as possible, as 3AC’s Zhu soon found out when his cryptocurrency hedge fund took off.

Despite the robust property market in Singapore, Zhu has so far struggled to offload his GCBs, although there have been many interested parties looking at the high-end properties, and no shortage of opportunistic bids.

Unlike other types of property, GCBs can only be purchased by Singapore citizens, and have strict land use restrictions, including limits on the amount of land that can be built on and the proportion that must be maintained as open space or gardens.

Sky-high prices (Zhu bought near relative highs) also mean that the addressable market for GCBs is not as large as imagined, especially when discerning buyers must consider the provenance of the sale and the cloud of litigation and liquidation that can overshadow such a Purchase.

Property prices could see a global softening, as central banks across the rich world raise interest rates for the first time in decades, raising the cost of financing property.

China’s property crisis isn’t helping matters either, dampening both domestic demand and reducing the pool of Chinese buyers for high-end foreign property.

Rapidly deteriorating cryptocurrency markets and “Crypto Bros” who have seen their fortunes plummet, thanks to the collapse of TerraUSD and Luna, as well as the insolvencies of a number of lenders means fewer are in the market for the kind of high-end real estate that was once synonymous with the industry.

With the US Federal Reserve fixated on bringing down inflation with a series of outsized rate hikes and against a backdrop of geopolitical and recessionary risks, the outlook for real estate demand, at least from the “Crypto Bros” is expected to be muted in the short term. -term.

By Patrick Tan, CEO & General Counsel at Novum Alpha

Novum Alpha is the quantitative digital asset trading arm of the Novum Group, a vertically integrated group of blockchain development and digital asset companies. For more information about Novum Alpha and its products, please email: [email protected]

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