Real estate is a very good investment, but I think your colleague's father's mistake was too put all his eggs in one basket, which I will never advice anyone to do.
The only mistake he made was investing in real estate in the same area because if he allocated and held many real estates in different areas. He would not have faced such dire consequences.
In this case, there is no need to diversify into other assets/investments like bitcoin or stocks. He just needs to diversify into different geographies.
Therefore, in my opinion, diversification will depend on many factors such as geography, security, asset type...it is not always necessary to diversify into many different types of assets. Because managing multiple assets is not easy and not everyone can do it.