< PreviousCOVER STORY | 20 AB Leaders – October 2023arabianbusiness.com 21 | BIJAN ALIZ ADEH COVER STORY arabianbusiness.com 21 CHARTING THE COURSE TO WEB3.0 Bijan Alizadeh has never been one to follow conventional paths. As co-founder and Group CEO of Phoenix Group, he’s spent the last decade blazing trails that few could see at the time As a pioneer in the decentral- ised technology space, Bijan Alizadeh has faced many chal- lenges in realising his vision. From navigating regulatory hurdles to scal- ing one of the world’s largest crypto mining operations, his decade-long journey exemplifies perseverance, hard work and dedication to an indus- try that very few were familiar with. It is this instinct and forward-think- ing vision that has cemented the success of Phoenix thus far and into a future where his vision is to build a decentralised future for all, to make it mainstream and for it to be adopted by the masses. “A lot of companies started moving to the UAE because it became a hub for crypto. So now, we have three hubs in the world. We have Miami, Singapore and UAE – Abu Dhabi and Dubai – the place where Web3.0 companies are increasingly moving to. But this move- ment started much earlier,” Alizadeh recalls. This forward-thinking ability to see crypto’s promise guided Alizadeh from his earliest days. His curiosity in digital assets emerged after receiving Bitcoin as payment in 0 , which was Powering progress responsibly Sustainability remains core to the group’s operations under Alizadeh’s leadership. Phoenix’s facility sources 6 percent of electricity from renew- able sources like solar and hydro according to the co-founder. “Too often mining’s energy use is exaggerated. We account for just 0.3 percent of global power, with over half from greener alternatives,” he stresses. The stable power demand also helps utility providers manage variable loads and the consistent energy demand from mining also supports grid stability. “Crypto mining as a sector receives disproportionate criticism, but many other industries consume far more energy than us, with less scrutiny.” With Phoenix’s imminent IPO on the Abu Dhabi Stock Exchange (ADX), it validates the vision and determina- tion of the co-founders, Alizadeh and Ali, to build a robust and regulated global player, homegrown in the UAE. But financial success has never de ned their ambition. Their ambi- tion is derived solely through a passion to execute and deliver. BY TALA MICHEL ISSA, SENIOR REPORTER, ARABIAN BUSINESS when, Bijan together with his business partner Munaf Ali, saw a huge poten- tial in this untapped market and subsequently established Phoenix. The competitive advantage and success of Phoenix was derived from rst mover advantage, the ability to secure competitively priced utilities through strategic partnerships, access to equipment and success followed as Bitcoin’s price skyrock- eted, making Phoenix one of the earli- est and largest mining companies in the world today. But as regulations evolved rapidly across jurisdictions, Alizadeh’s ability to truly understand this ecosystem and be an advocate of regulatory change resulted in its success today. Crypto mining as a sector receives disproportionate criticism, but many other industries consume far more energy than us, with less scrutiny COVER STORY | 22 AB Leaders – October 2023 Nurturing the local ecosystem While individual successes like Phoe- nix’s imminent IPO validate Alizadeh’s foresight, his objectives have always extended beyond any single venture. “Our goal is empowering innova- tors throughout MENA to compete globally,” Alizadeh outlines. Through initiatives like UAE’s rst fully regu- lated exchange M2 and venture capital fund Cypher Capital, he actively culti- vates regional talent and projects. As a driving force behind M2, Aliza- deh collaborated closely with regula- tors. “We are supporters of regulation, and to be honest, what the leadership in Abu Dhabi is doing, is very impres- sive. Other countries are now following their example,” he praises. “Events like FTX prove why proper oversight and regulation protects users. Regulators want discipline and we want their support long-term so we embrace them and work with them for a sustainable future for all.” Cypher Capital’s $100m fund and coworking facilities likewise nurture early-stage startups and companies. “Our hope is that we can incubate regional start-ups and projects, and turn them into a household name,” Alizadeh reveals. Educating future builders To accelerate adoption, Alizadeh emphasises the importance of knowl- edge-sharing. “Education will breed adoption, adoption will bring awareness and awareness will take us to the next stage,” he says, emphasising that this virtuous cycle is now well underway through e orts of universities, accelerators and events being held in the UAE. This informative spirit stems from his own entry point into crypto. Aliza- deh recalls meeting a 23-year-old Indian billionaire who made his wealth through Bitcoin in the lobby of the Four Seasons hotel in Bali back in 2012. “A 10-minute meeting turned into seven hours. He explained to me what blockchain was and how it works and I decided that I wanted to play a part in this sector and educated myself across its entire eco-system.” Phoenix Group is aiming a successful IPO on the Abu Dhabi Stock Exchange (ADX) Back in 2015, not many people believed in cryptocurrencies and investing in Bitcoin, he recalls. Yet his curiosity was piqued after receiving his rst cryptocurrency as payment. Along with his partner and co-founder, Ali, they both decided to build one of the UAE’s earliest crypto mining facilities in 2017 and have never looked back. “Munaf and I believed in the tech- nology because we both come from a nancial and capital markets back- ground. We recognised that this was the future and we needed to move into this space, and fast. So that was when we started our first very small, 1-megawatt operation in UAE, which became our learning ground.” “Who could have guessed that this small 1-megawatt operation in 2015 would grow exponentially due to our early conviction? “Success followed as Bitcoin’s price skyrocketed, and we took risks, we risked it all because we believed in its potential and future, and it was this conviction and vision that made Phoe- nix one of the largest mining compa- nies globally today,” says Alizadeh. But the journey wasn’t easy, as regulations impacted mining sites worldwide, Alizadeh had to adopt, and embrace to ensure sustained success. But Alizadeh approaches his work in the blockchain industry with stead- fast optimism. “Perpetual optimism is a force multiplier. This is a new indus- try, we are constantly learning and adapting, but change needs to be coupled with inherent faith and opti- mism, so even when things get tough, we have to be optimistic,” he explains. While acknowledging the immense challenges faced as an early pioneer in crypto mining like relocating rigs internationally due to shifting regu- lations, Alizadeh never lost sight of his long-term vision. $1.08TR The market capitalisation of the global cryptocurrency segment as of 12 October 2023arabianbusiness.com 23 | BIJAN ALIZ ADEH The UAE is spearheading efforts in Web3, Blockchain, Crypto, and decentralisation adaptation “Overnight, China banned crypto. We had to pack machines on a Boeing 7 7 and leave,” Alizadeh recalls. Such tests reinforced Phoenix’s exibility, positioning it at the forefront of the industry as it matures. “I’m not saying we›re changing the world. But we’re doing our part,” he notes modestly. Th rough Phoenix Group’s expanding operations now powering the Middle East’s most sustainable data centre, educational initiatives like Cypher Capital nurturing local startups, and collaborative efforts with forward-thinking regulators at ADGM, Security and Commodities Authority (SCA) and Abu Dhabi Exchange (ADX), Alizadeh exhibits optimism that continued progress and the proliferation of knowledge will pave the way to Web .0’s immense possibilities being realised across the region. Today, he sees vast untapped potential as penetration grows. “We see a lot of projects come. We hold a lot of gatherings, a lot of events, we love to share information and education to foster growth. It’s about innovation and education. Education is key.” He describes how just 4 percent of the world currently owns crypto, leav- ing massive potential as penetration is expected to rise towards 0 percent or more by 0 0. A pioneering region rises Above all, Alizadeh credits the UAE’s leadership for recognising block- chain’s promise years before others and for establishing an environment where innovations can thrive. “Their forward vision opened the doors for Phoenix and set the foundation we’re building upon – and we are grateful for the leadership of Abu Dhabi that supports the future and innovative nature of this new digital era,” he says thankfully. “The leadership in Abu Dhabi deserves applause for spearheading efforts in Web , Blockchain, crypto, and decentralisation movements, even before blockchain gained wide- spr ead at tention. T heir “This foresight has allowed initia- tives like Phoenix to thrive and has laid a strong foundation for further development in this eld.” In particular, the Abu Dhabi Government, ADX, and ADGM have played a signi cant role in showcasing their foresight and understanding of the potential of these technologies. “We are grateful for the initiatives and support they provide, as they continue to shape and advance the industry,” Alizadeh expresses. This pioneering regulatory frame- work and focus on the digital sphere ensures - according to Alizadeh - that MENA’s growth will dwarf anywhere else in the world as more embrace these technologies and we believe that the UAE is well-positioned to realise this promising future and be global leaders in this space. forward-thinking vision, under- standing of the industry’s potential, proactive approach to regulation, establishment of the right infra- structure, and support for collabo- ration, have been instrumental in creating an environment where blockchain innovations can thrive,” he says. Perpetual optimism is a force multiplier. This is a new industry, we are constantly learning and adapting, but change needs to be coupled with inherent faith and optimism 24 AB Leaders – October 2023 SUSTAINABILIT Y While casino hype boosts demand, China eyes UAE property market Ras Al Khaimah’s ambitious Wynn Resort casino won’t open for a few years yet, but the UAE’s property sector is already experiencing a boom, largely driven by a 130 percent rise in Chinese buyers The highly anticipated launch of the UAE’s first legal casino at the Wynn Resort in Ras Al Khaimah and the establishment of a new legal gaming regulator are expected to boost confidence in the country’s already booming property sector and more, experts tell Arabian Business. The UAE, and Gulf region’s first legal casino, is expected to be launched in early 2027. Though the highly anticipated resort is still in the preliminary construction phase, it is already attracting investor interest globally. Shane Breen, Head of Savills in Sharjah and Northern Emirates, tells Arabian Business that the casino has already accelerated growth in Ras Al Khaimah’s high-end residential BY TALA MICHEL ISSA, SENIOR REPORTER, ARABIAN BUSINESS REAL ESTATE The potential transformation of the UAE into a prominent player in the gaming arena is expected to catalyse economic progressionarabianbusiness.com 25 REAL ESTATE With the casino currently under construction, we anticipate a surge in new developments that will further enhance the real estate landscape market, with unprecedented appetite from investors seeking lifestyle devel- opments near the casino. “Currently, the majority of head- line activity is in the o -plan market. However, the impact is also being seen in secondary market prices, which are increasing signi cantly in develop- ments like Al Hamra and Mina Al Arab,” says Breen. UAE gambling regulator boosts investor con dence Early last month, the UAE set up a regulatory body for “commercial gaming” – a step which could poten- tially allow for casino licenses across the country. Ali Manzoor, Head of Hospitality at CBRE Middle East, views the new regulatory framework for gaming as a “significant initiative” that will enhance the UAE’s appeal as a major tourist destination. “This, alongside further antici- pated developments in this sector, will help further enhance the UAE’s appeal as a major tourist destination,” Manzoor says. Breen echoes his sentiment, adding that the regulator will boost investor confidence in the market, with expectations of it having a direct impact on other local real estate markets such as in the emirates of Umm Al Quwain or Ajman if prices escalate too much in Ras Al Khaimah. “It will also generate new invest- ment opportunities in the hospitality and entertainment sectors from GCC and international investors, contrib- uting to economic growth.” These new investment opportuni- ties, according to Paul Kelly, Director of Operations at Allsopp & Allsopp, will generate immediate bene ts for job creation and an in ux of tourists. “These jobs will be created not only in the gaming industry but hospi- tality, transportation and even local retail sectors to name a few,” Kelly says. “Dubai, already a well-established tourism and business centre, could find itself climbing new economic ladders with these launches.” Chinese investors have historically been drawn to destinations with casino gaming, but as the UAE prepares to open its first casino resort, they are increasingly investing in Dubai real estate as well. According to real estate firm Allsopp & Allsopp, Chinese invest- ment in Dubai’s residential property market has surged 130 percent so far this year compared to the same period in 2021. Though Chinese investors have long been active in the UAE, the upcoming casino seems to be accel- erating their interest. Dubai appears poised to attract even greater invest- ment from Chinese nationals look- ing to own property near gaming facilities. “Chinese investors have shown a preference for spacious living units, with a substantial 78 percent opting for cash transactions according to our records,” says Kelly. “While Allsopp & Allsopp’s oper- ations are exclusive to Dubai, the positive impacts are expected to reso- nate in Ras Al Khaimah as well. The blossoming tourism sector, fueled by the presence of casinos, is anticipated to allure a diverse pool of investors keen on capitalising on this promising enhancement to the nation’s economic landscape,” he added. Richard Waind, CEO of Better- homes tells Arabian Business that the introduction of legal gaming has created “significant excitement” among investors, particularly in Ras Al Khaimah where property prices have seen a rise. “With the casino currently under construction, we anticipate a surge in new developments that will further enhance the real estate landscape, elevating its pro le and prospects for robust growth,” says Waind. “Gaming casinos hold great poten- tial for Dubai to boost tourism, as evident from the success stories of destinations like Macao and Las Vegas. Their track-record demonstrates the significant positive impact such establishments can have on a city’s tourism industry.” “We expect that in the long run, this will add to the already expansive list of destination drivers that the UAE has to offer, thereby encouraging a new cohort of visitors and more diver- si ed source markets,” says Manzoor. The casino and the gambling regu- lator are expected to, as a result, support long-term nationwide economic stability. Only further developments will tell if the positive spillover e ects being forecasted will come to full fruition. Chinese investor activity surges 130 percent after news of casino launch “The potential transformation of the UAE into a prominent player in the gaming arena is expected to catalyse economic progression, elevating demand from residents and inves- tors, and bene ting homeowners,” Kelly says. “The infusion of the gaming industry is foreseen to be a pivotal element in amplifying the nation’s economic dynamism.” The introduction of legal gaming in the UAE has created signi cant excitement among investors, says Waind26 AB Leaders – October 2023 ECONOMY Democratising real estate: How proptech is driving accessibility for investors Technology has opened the door a larger audience to bene t from real estate We often praise the advantages that proptech platforms o er in terms of exibility and efficiency, but the accessibility bene ts can be overlooked. What do I mean by accessibility here? I mean the quality of being easy to access, understand and use by anyone, regardless of their means or ability. Personally, I think that proptech’s potential to make property investment a viable opportunity for millions, if not billions, of people is one of its greatest assets. By enabling a personalised, customer-centric approach, proptech can make it easier to accommodate the needs of every type of investor in an e cient and e ective way. So, how exactly do I see proptech helping to democratise the real estate investment landscape? BY AMIRA SAJWANI, GENERAL MANAGER – SALES AND DEVELOPMENT AT DAMAC PROPERTIES REAL ESTATE By leveraging advanced technology, proptech platforms are helping to reimagine outdated practices in the real estate sectorarabianbusiness.com 27 REAL ESTATE Proptech players are now able to deliver remote yet immersive digital viewing experiences from anywhere in the world Removing physical barriers Video tours are great when it comes to accessibility, but technologies such as virtual reality (VR) and augmented reality (AR) are changing the game. Proptech players are now able to deliver remote yet immersive digital viewing experiences from anywhere in the world. Prospective investors can use these tools to navigate premises, inspect nishes and gain a sense of the space on o er without having to be physically present. From people of determination, who may nd it di cult to visit prop- erties in person, to overseas investors, this functionality is proving especially beneficial in bringing real estate opportunities to a wider audience. Seamless digital experiences I believe legacy systems and heavy, paper-based administrative workloads – often requiring an investor’s physical presence – have held too many people back for too long in real estate. Another accessibility advantage of many proptech platforms is their digi- tal documentation and transaction functionality. These new digitalised systems allow prospective investors to review contracts, make o ers and sign on the dotted line remotely and, most importantly, securely. Accessibility features like these negate the need for physical paperwork, meaning users can manage their port- folios e ectively regardless of where they are in the world. This is just one example of how, through the use of AI, big data and cloud-based applications, proptech is constantly evolving to further improve investor experiences. Financial exibility One of the most important accessibil- ity-related benefits that proptech o ers relates to nancing and invest- ment options. Rent now pay later (RNPL) and fractional ownership mechanisms, such as those o ered by PRYPCO, are helping to bring real estate to an ever- wider audience of people who might otherwise be excluded. A more accessible market By leveraging advanced technology, proptech platforms are helping to reimagine outdated practices in the real estate sector. What does all this add up to? Through fractional ownership and investment, the introduction of novel nancing mechanisms such as RNPL, the digitalisation of paper-based processes and immersive remote viewings, this sector is helping to create a more dynamic and demo- cratic property market – in particular, one that is accessible to those who may lack the capital to pursue tradi- tional investment paths. Of course, traditional real estate channels are in no danger of being replaced anytime soon – but that’s not the point. The point is that proptech is supplementing these channels by making real estate investment a real- istic option for more people around the world, which can only be good news. As a result, more people than ever before now have an opportunity to actively participate in one of the most exciting sectors on earth. $47.8BN The estimated value of the global proptech market by 2033, according to a report from Future Market Insights At the same time, these platforms are acting as central hubs, enabling users to track their assets, monitor their income and assess value appre- ciation all at their own convenience. In short, the novel nancing and investment opportunities provided by proptech platforms are opening up real estate to more and more people, making it accessible to individuals who potentially lack the funds to rent, buy and invest through traditional real estate channels. Proptech is supplementing channels by making real estate investment a realistic option for more people around the world, Sajwani says28 AB Leaders – October 2023 SUSTAINABILIT Y Dubai residents face signi cant rent increase Rents continue to rise, with an overall increase of 22 percent observed in the year to July 2023 Dubai’s rental market has seen a remarkable turnaround over the past two years, marking the end of a prolonged period of negative growth that began in mid-2015 and persisted until late 2021. The resurgence in the Dubai rental market has been so signi cant that average apartment rents have surged to their highest levels since February 2017, while average villa rents have reached record highs. Furthermore, rents continue to rise, with an overall increase of 22 percent observed in the year to July BY ARABIAN BUSINESS STAFF REAL ESTATE Experts predict that new rental contract premiums may start to decrease as renewals adjust to market ratesarabianbusiness.com 29 REAL ESTATE Dubai’s rental market has experienced a signi cant rebound, with rising demand and shifting dynamics between new and renewed contracts 2023. However, this growth rate has moderated throughout the year. Data from the Dubai Land Depart- ment indicates that in the year-to- date to July 2023, the total number of tenancy contracts registered reached 325,727, representing a signi cant 43.5 percent increase compared to the 227,011 contracts registered during the same period in 2019. Taking a closer look at the data, there is considerable fragmentation within the rental market. New contract registrations have decreased by 12.6 percent, while renewed registrations Downtown Dubai, Palm Jumeirah, and Business Bay achieving significant premiums on new rental contracts since early 2021. In contrast, second- ary neighbourhoods recorded rela- tively negligible premium growth compared to prime areas. In the villa segment, characterised by tighter supply, demand for single-family homes has risen signif- icantly. This has led to an increase of 29.9 percent in tenancy contract registrations compared to 2019 levels, with the average premium for new rental contracts standing at 25.2 percent. Despite some uctuations, this premium remains high. Experts predict that new rental contract premiums may start to decrease as renewals adjust to market rates. However, due to the limited supply of villas, this premium is unlikely to decrease substantially in the immediate future. In the long term, as new rental rates stabilise, this premium is expected to shrink as renewals align with the market’s new equilibrium. Dubai’s rental market has expe- rienced a significant rebound, with rising demand and shifting dynam- ics between new and renewed contracts. While new rental rates have seen premiums, this trend may be approaching its peak, and the market is expected to stabilise in the coming years. 325,727 The total number of tenancy contracts registered in Dubai from January to July this year, according to data from DLD have surged by 29 percent. This suggests that tenants are increasingly reluctant to relocate due to the higher rates associated with new leases, especially in prime and core residential areas. Many tenants are choosing to take advantage of the protection o ered by the RERA (Real Estate Regulatory Agency) rental regulations, which limit annual rental increases to a maximum of 20 percent. The prevalence of lease renewals and current market conditions have led to a divergence in rental rates between new and renewed contracts. To understand the extent of this divergence, a detailed analysis of nearly 703,000 residential rental transactions between January 2018 and July 2023 was conducted, covering both apartments and villas. In the apartment segment, histor- ically a tenant-favoured market due to oversupply, new rental contracts regis- tered average discounts of 5 percent compared to renewed contracts between January 2018 and July 2021. However, as demand increased, this trend reversed, with new rental rates surpassing the average rates for renewed contracts. By July 2023, the average premium for new rental contracts compared to renewed contracts stood at 20.1 percent. This trend has not been uniform across all communities and market segments, with prime areas like Tenants are increasingly reluctant to relocate due to the higher rates associated with new leases, especially in prime and core residential areas of DubaiNext >