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As crypto currencies crash, it’s good news for property investment

There was a time when some investors favoured Bitcoin and other crypto currencies over property - but a wobbling economy means that could be all over.

Clynton Nel

clynton nell property

It is hard not to notice the buzz surrounding the world of cryptocurrencies and digital assets, with incredible stories of overnight multi-millionaires and twenty-something so-called ‘crypto kings’ amassing huge fortunes from the comfort of their living rooms.

As exciting as all this sounds, it is also impossible to ignore the accompanying headlines reporting major losses, speculation about market crashes and regulatory concerns making investors uneasy.

Whilst naturally those in our industry are arguably biased towards property, so much volatility in other markets does highlight the resilience and continued strength of property as an investment. Its recovery from the pandemic alone is reason to take note – in fact, we had our busiest period on record for lettings just last month.

In contrast, Bitcoin crashed to an 18-month low last month and is further down to £18,000 at the time of writing whilst Ether, the world’s second largest crypto token shed a third of its value after the $40bn collapse of cryptocurrency luna sent shockwaves through a key portion of the digital asset market.

Against this backdrop, it’s no wonder property is considered ‘as safe as houses’.

Whilst property is of course not immune from global geo-political issues and has had its fair share of ups and downs over the years, it is certainly far less dependent on the strength of investor sentiment than other asset classes are.

There are several reasons why I believe property, particularly in London, remains the most attractive opportunity for investors.”

Firstly, property is a tangible asset – a physical entity offering a dual purpose for investors. It is not an ‘invisible’ creation at the mercy of investor sentiment.

Secondly, people need homes and this is not going to change, particularly in London where the demand still far outstrips supply. With greater numbers returning to the capital following the pandemic and housebuilders struggling to meet this growing demand, this trend is undoubtedly set to continue.

Property is also one of the most well-regulated and transparent industries around. Whilst the UK’s property market is supported by a robust regulatory framework, the same cannot be said for other asset classes, in particular crypto, which is currently not answerable to any authority and therefore does not benefit from the same kind of safety net that property enjoys. It is not lost on me that this is the purpose of DeFi however, with that being the case, the space is therefore currently more volatile and speculative in nature.

Rising inflation

With inflation rising, property is becoming an even more attractive investment opportunity. Unlike many other asset classes, property is an inflation-beating asset and London rents are currently at a record high, meaning buy-to-let investors stand to gain significantly in months and years to come.

Whilst it is impossible to predict the future, property has the benefit of longstanding historic data behind it, along with evidence and generational trends that allow investors to make well-informed investment decisions as opposed to leaps of faith. Property has a far greater degree of predictability, stability and clarity – three key ingredients required when weighing up an investment opportunity.

Having emerged stronger than ever from one of the most challenging periods of this generation, it is clear to me that investing in property is by far the most sensible, safest and potentially lucrative option when compared to other asset classes at the present time.

Clynton Nel is Residential Director at London agency JOHNS&CO.

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