AAR Conference: Bitcoin Involved in Chinese Real Estate

Attendees at the recent Arcadia Realtors (AAR) conference in California were given $1 in Bitcoin as part of a tech-focused session on July 9.

The California-based trade organization provides behind-the-scenes services to real estate agents, including continuing education on business-related topics in the San Gabriel Valley. The conference was the first time the organization focused on bitcoin and its potential use cases for the real estate industry.

In his remarks at AAR, conference moderator and Meson.re CEO Ragnar Lifthrasir highlighted how Bitcoin can be used in lucrative international real estate trades when it comes to California. For his part, Meson.re said his company is focused on helping mainland Chinese investors buy U.S. real estate, though Lifthrasir believes the service raises the overarching question of how Bitcoin can increasingly play a role in the real estate industry as a whole.

Fraser told CoinDesk:

“I think people need to understand the problem and why there is demand in China. People will understand it very quickly. There are two ways to buy Bitcoin now, one is the black market and the other is the gray market. The black market is where you know who knows who, and the gray market is where you don’t know how it works but people’s money flows there.”

Using these avenues, Chinese investors bought $22 worth of bitcoin in real estate in 2013, up from $10 in 2011, accounting for 25% of all U.S. real estate acquisitions by foreign buyers. Bitcoin simplifies much of the sales process today, which involves complex workarounds. As part of the sales process, AAR attributes this use case to the appeal of California real estate to Chinese buyers, although it is unclear whether technology has had an impact.

“Bitcoin is in the spotlight and in the news,” said Andrew Cooper, AAR’s chief executive. “We need to educate our staff on how Bitcoin can be used in real estate so that if their clients ask for more information, they can get it first.”

Sharp questions

He explained to an audience of real estate agents looking to attract investors from China that they had a big opportunity: Chinese law caps wire transfers at $50,000 per person per year, but there is currently no such limit for Bitcoin.

Furshila Hill has noticed that his audiences are receptive to the opportunity to be informative, but he has also found that they sometimes ask pointed questions about whether Bitcoin fits the needs of potential customers.

For example, he said an audience member asked if Bitcoin would only be an option for Chinese buyers for a limited time if it potentially violated the spirit of the law.

However, Fochilla brushed off such questions because there is no such thing as Bitcoin to circumvent capital controls in Argentina, Greece and other economically distressed countries.

“I don’t think it’s a grey market, we’re doing it legally,” he explained. “You can buy as much bitcoin as you want, no problem at all. We help clients acquire bitcoin, and then we help them convert it into dollars if they want to buy property.”

Fraser fondly compares Bitcoin to the current system, arguing that the existence of alternatives can also be seen as loopholes in the system.

"You don't have to compare us to perfection, just compare us to the alternatives," he said.

Growth Potential

Fochilla could not guarantee that attendees would walk away from the two-hour talk with a firm grasp on the topic of bitcoin, but he was optimistic that bitcoin would emerge as a solvent to recent activity in the Chinese market.

“I was frustrated after my presentation because a lot of them didn’t get it,” he said, “but we made money in the first few weeks when they were stuck in the stock market.”

Perhaps because of this relationship, Furshila Hill's speech was covered by the Chinese-language news media, although the coverage also hinted at the confusion of some of the attendees.

Meson.re did not generate any sales as a result of the meeting.

Still, AAR’s Cooper was willing to stress that the meeting was useful given plans to incorporate bitcoin into international trade and cross-border payments.

Cooper went on to emphasize that the growing awareness of the concept is also a solid outcome, considering that many people are still unaware of Bitcoin.

“The response we got from attendees who didn’t necessarily want to buy Bitcoin themselves, but wanted to understand how it worked in real estate, was tremendous,” Cooper said.