How Bitcoins, Canadian Immigration Laws and Real Estate in China are Affecting the Value of Numeric Domains
After one of the rainiest winters of the past years, Spring has finally come in Lisbon:
Sure it feels better working when the sun is out! Together with the sun, the tourists have come back, and surprisingly enough, most of them are Chinese, who this time seem very active on the local real estate market.
That brings me back to virtual real estate – I was studying my spreadsheets this weekend and noticed something amazing: numeric domains that used to sell for $40k just three months ago are now at a minimum of $50k-$55k (I am talking about domains without a 4). The few people who have not caught up to this, already sold their assets; and the many sellers who did have increased their prices.
But Why Has This Happened?
In order to understand this, we have first look at why Chinese are investing now so heavily in numeric domains. Yes they are rare and easy to remember, but there are also a few more reasons for the steep increase in value:
1. China’s growth has brought unexpected wealth to middle classes. With a strong saving culture, Chinese have been looking to invest their money somewhere. With bank returns on the low side, laws against investing abroad, and the domestic stock market being so volatile, the Chinese middle classes has been pouring their money into real estate, fueling one of the largest construction boom of the past years.
There is a urban legend saying that Shanghai in the nineties used to host 1/4 of all the world’s construction cranes, just check this amazing picture. The problem is, with the demographic growth limited by the one-child policy, many apartment buildings in big cities are now empty and do not generate revenue. Many people believe that the real estate market in China is about to crash and there is a frenzy from wealthy Chinese to relocate their money elsewhere, possibly in intangible assets.
2. Canada just announced the closure of its immigration program destined to millionaires. By rejecting about 60,000 applications (mostly from China), Canada has now to refund tens of billions to wealthy Chinese that are now looking to invest their money elsewhere. Some of them are looking to invest in other places like Portugal and St Kitts and Nevis, who are offering similar programs – either way those billions are definitely going somewhere.
3. Another client of mine recently mentioned that the decrease in bitcoins investment is slowly reflecting in an increase of the money poured in the domain market. While I am not an expert on this specific market, this might be an additional reason why the youngest generation of Chinese is now looking at domain names.
Whatever the truth is, there has been a clear, noticeable 20% to 25% price increase on all numeric domains. LL.com, LLL.com, LN.com and NL.com have also increased in price, along with any domain that has a clear cut liquid value.
Will this trend continue? Only the next months will tell. As usual, feel free to contact me if you have any interest in investing in numeric domains, we have one of the largest inventory on the market available for sale. Stay tuned and all the best…from Lisbon!