For an industry that prizes digital assets, some of its most well-heeled proponents are actually very much into real assets, specifically real estate.
If a man’s home is his castle, then cryptocurrency has helped to build some mighty impressive ones for its early adopters and most successful players.
Despite the current so-called “Crypto Winter,” some of the biggest names in the cryptocurrency industry were snapping up prized real estate assets from Seoul to Singapore, the Bahamas to Dubai, during the halcyon days of plenty.
During its heydays, founder of Terraform Labs and the infamous face of algorithmic stablecoin TerraUSD and its sister token Luna, Do Kwon, once lived, and possibly continues to live, at Singapore’s ritzy Nassim Road neighbourhood, 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 tree-lined street that’s the equivalent of Singapore’s billionaire mile, with mere millionaires priced out of this exclusive zip code and dominated by “good class bungalows” or “GCBs” for short.
Singapore’s most coveted type of housing, 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 ringed by embassies, at the height of his influence, the select residential district befitted Do Kwon, who publicly claimed to have led a “frugal” life.
Back home in Seoul, Do Kwon lived at an equally exclusive and upmarket apartment in Galleria Foret, in Seoul’s posh Seongdong district, on the east side of the capital city.
For the uninitiated, Galleria Foret isn’t just home to the former crypto-rich, it also bears the distinct privilege of housing some of South Korea’s biggest celebrities, including Kim Soo-hyun from Netflix hit “It’s Okay to Not Be Okay” and G-Dragon of South Korean idol group “Big Bang.”
Ensconced in luxury in two soaring 45-story towers overlooking the Han River, and with views of 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?
No matter, leases start at just US$30,000 a month, a small price to pay considering that the interiors of Galleria Foret were designed by renowned French architect Jean Nouvel, and the gardens by Italian landscape architect Mario Venturi Ferriolo. Galleria Foret made headlines recently when an irate investor, who allegedly lost US$3.2 million from the implosion of TerraUSD and its sister token Luna, somehow managed to breach the security at the upscale 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 the almost insatiable appetite for property of its 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 farming.”
And while Zhu did buy a few GCBs, as well as plenty of other “ordinary” bungalows, a townhouse and shophouse 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-story, six-bedroom GCB in the tory Yarwood neighbourhood 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 communal facilities.
Sharing a swim with a neighbour was however 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 wouldn’t have to take a dip with uninvited guests.
Nestled along Balmoral Road, an exclusive estate just a 5-minute drive to Singapore’s famous Orchard Road shopping belt, Goodwood Grand is a freehold 73-unit development that includes a 65-unit condominium 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-story house with a basement, attic and swimming pool was expected to have been completed by next year.
Despite having minted his fortune in digital assets, property title searches reveal that Zhu prized real assets, having bought no less than three bungalows from 2019 to 2021, worth an estimated US$60 million in total.
While Zhu was happy to make Singapore his headquarters, another crypto superstar ran a multi-billion-dollar cryptocurrency exchange without one.
Binance, the world’s biggest cryptocurrency exchange by market cap, has long claimed that it has no global headquarters, even as its 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 fund purchases for his Bitcoin wallet.
Fast forward to the present, and Zhao owns no less than two properties in Dubai, which is fast becoming a sanctuary for the world’s crypto elite.
Besides an apartment in Dubai’s glamorous Jumeirah district, which is within a stone’s throw of the 160-story Burj Khalifa skyscraper, Zhao also says he has purchased a mansion in the city, which is believed to be in the same area and estimated to be worth around US$2.8 million.
Yet not all of the biggest names in crypto are looking to buy, with some quite content to rent as well.
Take Sam Bankman-Fried for instance, 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 ritzy Albany Resort in New Providence, the 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 will need to fork out at least US$5 million for “entry level” digs that can go as high as US$75 million at the extreme end of the spectrum.
Bankman-Fried is willing to spend on his employees though, doling out some US$60 million to break ground on a new office building that is expected to house at least 1,000 workers along the shores of pristine white sand beaches and azure blue waters in the Bahamas.
While “Crypto Bros” may love real estate, and it does seem a good investment in an inflationary environment, Bankman-Fried’s approach may be the most financially prudent.
Because real estate is almost never paid for entirely in cash, the threat of higher interest rates is undermining some of the allure of property.
With the U.S. Federal Reserve aggressively raising interest rates to tame the fastest pace of inflation in over 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 great for bragging rights, they can be extremely tricky to offload when their sellers need liquidity urgently, as 3AC’s Zhu soon found out when his cryptocurrency hedge fund went belly up.
Despite the robust property market in Singapore, Zhu has so far struggled to offload his GCBs, although there have been plenty of interested parties viewing the exclusive properties, and no shortage of opportunistic bids.
Unlike other types of properties, GCBs can only be purchased by Singapore citizens, and have strict land use restrictions, including limitations on the amount of land that can be built-up 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 big as imagined, especially when discerning buyers need to consider the provenance of the sale and the cloud of litigation and liquidation that could overshadow such a purchase.
Real estate prices could see a global softening, as central banks across the rich world raise interest rates for the first time in decades, increasing the cost of financing property.
China’s property crisis is not helping matters either, dampening both domestic demand and reducing the pool of Chinese buyers for high-end overseas property.
Rapidly deteriorating cryptocurrency markets and “Crypto Bros” who have seen their fortunes dwindle, thanks to the collapse of TerraUSD and Luna, as well as the insolvencies of a string of lenders mean that fewer are in the market for the sort of high-end real estate that used to be synonymous with the industry.
With the U.S. Federal Reserve fixated on bringing inflation down with a series of supersized interest rate hikes and against a backdrop of geopolitical and recession risks, the outlook for real estate demand, at least from “Crypto Bros” is expected to be muted in the short-term.
By Patrick Tan, CEO & General Counsel of 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 go to https://novumalpha.com/ or email: ask@novum.global
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