Real Estate has historically been an expensive industry, yet one which the majority of us rely on to provide our dream property. The industry is incredibly hard to access, especially in terms of constructing properties, financing them, building a portfolio of properties’ investments or simply turning around a property.
Equity crowdfunding and lending have aided in making Real Estate more accessible for individuals and increasing capital channels for projects, as well as having facilitated institutional investors’ access to those deals. Investments start with a very minimal capital and allow everyone to participate in the development of those projects, at different levels.
Technology has made it easier to have access to funds and has fully automated the different processes behind those financing models, that have made it simple, fast and transparent to manage the complex offline processes that Real Estate often entails.
Europe and the US have been quick to reap the benefits of crowdfunding, with the UK leading the European Real Estate Equity Crowdfunding (REEC) embrace. Individuals can choose the type of project they wish to invest in, from the most popular being Residential property, to the commercial, retail, tourism and more.
Firms at the forefront of REEC
The United States have embraced alternative funding for Real Estate. eREIT (Real Estate Investment Trusts) such as Fundrise allow for investments to enter into a pool of capital that invests in multiple deals, generally without an accreditation requirement. Typically, they pay a higher relative dividend compared to most other publicly listed investments.
StackSource (US-based) allow developers to find the best loan possible through lending. StackSource enables property development, redevelopment, acquisition and refinancing, from family housing, to hotels to apartment blocks. The lenders vary from a number of sources which offer different interest rates and terms, from traditional banks, to life insurance companies and small business administrations as well as crowdfunding. The platform acts as the middle-man, ensuring the development of property at the best deal. They also facilitate the connection of construction options for developers.
Housers an originally Spanish platform, has been more effective at reaching beyond its borders with attractive developments in Italy and Portugal. The focus is largely on refurbished apartments in the city. Naming itself as ‘pan-European,’ Housers has been effective at reaching across its borders and being viable for individuals across Europe, especially with the ability of ordinary people to start investing with very little capital.
Shojin property partners is a UK based platform which brings together experts, investors and developers in Real Estate. Shojin finds investments and ensures to its investors that it will co-invest as a way of proving its trust in the investment. Shojin provides a number of investment products to its clients such as mini-bonds, buy-to-rent (buy-to-let) deals, bridge loans, mezzanine loans for developers who need additional capital and its core, development projects.
Homegrown allows ordinary individuals to invest in UK property projects. Many projects aid the community with many projects focusing on the development of residential housing in areas where regeneration is boosting the welfare of the area. The below diagram reflects the detailed steps Homegrown makes to ensure investment is safely and successfully ensured by its clients.
Property and Real Estate equity and lending crowdfunding within the last few years has really taken off, giving ordinary individuals the ability to easily invest in often exclusive Real Estate opportunities. Within Europe, the most popular and successful platforms diversify largely by country. The main dominant players in those markets are within the UK which generally offers a preferable model across the board. Loans can vary from mezzanine to secured loans for example, depending on the scale and type of project. An SPV is often guaranteed so that once funded, investors become shareholders and shareholding voting occurs to ensure voters have their say on SPV impact.
Equity and Lending crowdfunding has allowed ordinary individuals to invest and borrow money to realize their property dreams. The major benefits of this relatively new phenomenon is that individuals can invest with smaller amounts in projects which are versatile which not only aids the local community but also diversifies their portfolio, a feature which was previously difficult to achieve without the ad hoc technical framework. Another important advantage is the ability of those with project ideas, particularly those who want to build or turn around properties in areas where it is most needed, to be able to realize their goals through the use of those types of platforms.
Year on year, REEC soared in popularity as more individuals who were previously unable to invest or borrow from the field, are able to pursue their Real Estate goals. The power of crowdfunding allows for doors to open and society to be housed.
Having gained experience in the UK Houses of Parliament, International Development and Chinese Think Tanks, Ellen has developed a passion for global affairs. She has undertaken her studies in the UK and has lived and worked in multiple countries including India, Switzerland, Spain and Hong Kong. She currently undertakes her studies at the University of Warwick, studying International Relations and Politics with a focus on Business. Ellen translates her passion for politics to the world of financial technology where she demonstrates a particular interest in developments in Asia.