Guest article by Jamie Moulton
With the rise of any investment, people tend to ask themselves whether it is the best investment mean. What are the opportunity costs? And should they exit other investments and pour their savings in this mean? All these questions are being asked again these days while we are seeing bitcoin prices spiking a day after another at an unexpected rate.
Before continuing on displaying the main opportunities and risk factors of both investments, bitcoins and real estate, we ought to mention that the article won’t compare directly between both means, but display one risk factor after another and feature its status in each one.
Submitting to the peer pressure and joining the buying frenzy of bitcoins or any other cryptocurrency isn’t a reasonable decision by all means. Investment means setting a study based on rational standards like calculating cost of investment and forecasting the potential gains over a certain period of time. Investing has never been an easy decision to make, it is not a piece of cake at all, and won’t be. It requires a lot of work.
The first and most important factor is value. Real estate usually retains its value, it doesn’t lose its value at a quick pace except in rare and exceptional occasions like national disasters, wars, or economic crashes.
Even in shaky economic times when the whole market is in a volatile state, real estate retains a lot of its value and witnesses slight recessions unlike other means like the stock exchange. Once the unusual shaky moments are over, real estate regains its value quickly like what happened in Dubai during 2008 and 2009 financial crisis.
On the other side, Bitcoin is a digital currency managed by no one and has no controlling institution. Moreover, it has no coverage and it is always fluctuating, even more than the stock exchange. Followers of Bitcoin price charts will figure this out. A significant surge in the virtual coin value took place by the mid of November, 2017, price moved from $11673 to hit $19209 at the end of December. Following this hike, the price dropped to lose more than 40% of its value and it is still fluctuating until the moment. When compared with real estate products, this instability in price value will never occur except in very narrow occasions happening due to economic, political, or even natural exceptional reasons.
Both means of investment are easy to cash out or liquidate. Real estate agents, as well as online real estate portals available everywhere around the world, made it very easy for property owners to sell their properties.
These websites are an online hub where potential buyers tend to gather to find out the latest real estate news, check out the price updates, and find the recently listed property in any market. All sort of properties can be sold online including lands, buildings, villas, and apartments.
Bitcoins as well can be cashed in just a click online from a website or mobile application. However, you need to be fast enough since the price is always changing, the moments between making up your mind and clicking on the buttons could cost you few more dollars. Real estate otherwise is more stable, prices would never change on hour-basis.
Do we really need it?
In other words, who demands this kind of commodity? First, let’s ask, is Bitcoin a commodity? Well, no one benefits from it, there is no use to it, most likely it is not a commodity. So, there is no real demand for it, except for gaining money. It also means nothing in sense of tangible value, unlike buying in the stock market which means having shares in active companies playing role in a certain business sector.
On the other hand, people will always need properties. We always need places to work, play, or live. So, there is a constant demand for this kind of product. Moreover, it is the oldest mean of investment on earth. It’s good to buy something that someone else needs it, either now or after a certain period of time.
You could get lucky from Bitcoin by gaining 10 fold, maybe more, your investment, but eventually, you will just cash it out and buy a piece of land or a mansion. There is no way to compare between a classic and safe investment like real estate and Bitcoins. The concept of wealth is changing, new means of investments are unfolding over the years, but still, real estate is the most secure and the most in demand. It will always stay the top real estate investment mean since it meets one of human needs, shelter.
Jamie Moulton is a Senior Data Analyst at JustProperty.com, a leading real estate portal in the MENA region, headquartered in Dubai, UAE.