Bahrain’s vibrant real estate sector is slowly entering a new era of digital transformation by adopting blockchain and artificial intelligence (AI) in development projects.
The tiny Gulf kingdom is following the footsteps of Saudi Arabia and the UAE in harnessing new technologies to attract investments, such as introducing cryptocurrencies and setting licensing requirements for crypto assets.
Bahrain has been a regional financial hub for over four decades and has a large concentration of financial institutions. In recent years, authorities have also authorised service-based platforms like Rain and Binance to provide users with regulated products and services on their mobile phones.
CONVERTING BLOCKS TO BRICK AND MORTAR
Today, blockchain and distributed ledger technology (DLT) are not only used in financial services, but also in the real estate sector to register or access records and ownership registries, draft smart contracts, and even for automated settlements.
The new diversified payment in the real sector eliminates middlemen and allows online money transfer without any trusted third party such as Bank or VISA on transactions and services.
For the layman, a blockchain is a digital database of transactions, especially those made in cryptocurrency (Bitcoin, Ether, Solana, XRP etc). It collects information in the form of blocks, and each block has a set capacity, which, when it hits threshold, is linked to previously filled blocks forming a blockchain.
These blocks are now being converted by tech-savvy investors into brick and mortar.
REGULATORS' RULES
To comply with ongoing global developments and cement its regional position as a leading FinTech hub, the Central Bank of Bahrain first issued rules and regulations governing crypto-assets in the Crypto-Asset Module (CRA) in 2019, which laid out rules for licensing, governance, minimum capital, risk management, anti-money laundering, and cyber security for digital asset services, among other requirements.
In March this year, the CBB issued amendments to the CRA module to cater to the ongoing developments in crypto-assets markets and to comply with industry best practices while enhancing investors’ protection.
Bahrain’s real estate regulator, Real Estate Regulatory Authority (RERA) in April last year announced the National Real Estate Plan (2021-2024) to boost the real estate sector using PropTech solutions leveraging technologies such as blockchain and AI.
RERA chief executive Shaikh Mohammed bin Khalifa Al Khalifa at the time said the new blueprint will see integrated investment-friendly ecosystems and bring in technology-focused regulatory reforms that will further push the PropTech market.
He added there were various PropTech solutions rolled out that allow comparative house hunting, or competitive asset management to be undertaken from home or office.
ACCEPTING CRYPTO
The proliferation of the above new technologies is now focused on the real estate sector, with some developers accepting crypto payments for sale of properties.
Bin Faqeeh Real Estate Investment Company announced its cryptocurrencies payment services last November by partnering with Eazy Financial Services “Eazy Pay”
“Bin Faqeeh enables investors and individuals from all around the world to buy its real estate properties in cryptocurrencies through Binance’s platform and through its website,” said a company spokeswoman.
“And we are currently accepting all types of cryptocurrencies.”
The spokeswoman did not reveal on how many properties were sold using the crypto payments but added there is a growing interest among buyers.
“We receive a lot of inquires everyday by crypto enthusiasts about our cryptocurrency services.
“However, we think that we still need to educate the market more about crypto in general and about our cryptocurrencies payment services.”
FIRST MOVER
In November last year, Carlton Real Estate became Bahrain’s first real estate brokerage to accept crypto asset transactions for property purchases and other real estate services in Bahrain.
This was a result of its partnership agreement with CoinMena, a Bahraini provider of crypto asset services.
CHANGING THE WAY WE INVEST
“Bahrain‘s real estate sector has bright prospects with mega project developers upbeat due to market confidence,” says Nasser Al Ahli, who is former president of the Bahrain Real Estate Association.
“The latest trend we have started to see in the sector is the use of crypto currency being introduced as an alternative to cash. Some of the countries have permitted real estate transactions backed by high-end security that has replaced the conventional method of wire transfer.”
Al Ahli says such digital transactions in the real estate sector are also happening in Bahrain.
“We are definitely observing limited transactions by some developers, but they are not popular as the society as a whole is still sceptical about crypto currency.
“Another aspect is the use of AI in real estate, which is far more popular than crypto, as its modern algorithms can help buyers search real estate based on their budget, specifications and other requirements.
“I expect the modern technology that will be adopted sooner or later will be of great help to developers, real estate brokers, and sales agents to provide customised solutions to their clients interested in property investment.”
CRYPTO CRITICS
However, critics to the digital change say it would take time to convince buyers to switch away from traditional cash transactions to buy a house, to using their e-wallets for crypto payments.
“I am not fully convinced about crypto payments in the real estate sector, because many like me think it’s a gamble and still prefer to do cash business when purchasing a property,” said a Bahraini real estate expert who spoke on the condition of anonymity.
“Having said that, there is no doubt that companies are increasingly accepting crypto payments or using virtual or augmented reality to showcase their properties to clients without them visiting their offices, saving time for both parties.”
BAHRAIN MARKET OUTLOOK
Bahrain’s real estate sector is recovering to reach pre-pandemic levels with several mega projects underway across the country visible, with the movement of trucks and construction cranes.
Latest data from the Survey and Land Registration Bureau (SLRB), states that real estate transactions in Bahrain totalled 6,336 in Q1 2023, an increase of 14.5 percent year-on-year (YoY), as well as an increase of 12 percent quarter-on-quarter (QoQ).
The market confidence is backed with gains in retail sector and mixed-use development, with a growing trend inclined to community retail shopping complexes, which provide services to residential areas.
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