Real Estate Crowdfunding

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Real Estate Crowdfunding, ,Alternative Finance Sector Report - October 2014 12
REAL ESTATE CROWDFUNDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
October 14
AUTHOR
Samantha Goins
risk and therefore minimum investment
levels should reflect this. The lowest
equity investment was US$5,000 and the
average was much higher at US$25,600.
As debt based investments are often
offered by relatively established
companies they are seen as lower risk.
The minimum investment is as low
as US$1,000 with the average at just
US$7,000. The lower capital requirement
and less stringent regulation means
debt based investments are more widely
accessible to investors.
Minimum Investment Equity vs Debt
Offerings (2014)
Source: Intelligent Partnership
Due Diligence
71% of platforms identified undertake
some degree of due diligence before
allowing an investment to be listed.
Although we do not know the exact
criteria each platform requires of the
developers, providing some form of due
diligence will ensure that only qualifying
opportunities are available to investors.
Just because the platform undertakes
some due diligence it doesn’t mean that
the investment is safe, or that it is suitable
for the investor. Investors should always
perform their own due diligence to verify
any checks undertaken by the platform.
Locations
The crowdfunding concept is spreading
rapidly and covers a number of countries
around the globe. The majority of
platforms are based in the US, followed
by the UK and Canada. There is a lot of
potential for growth into new markets
over the coming years, particularly Asia
and South America.
Platform Locations (2014)
Source: Intelligent Partnership
Investment Structure
The ratio of equity and debt structured
investments was relatively evenly
distributed across our sample with 38%
and 40% respectively. Restrictions on
debt based investments are less stringent
and there are a number of opportunities
available. Co-investment accounted for
22% of our sample, with every investment
coming from one platform that specialise
in this investment model.
Investment Structure (2014)
Source: Intelligent Partnership
Property Type
Real estate investment opportunities were
found across residential, commercial and
mixed use (commercial and residential)
properties. Residential accounted for
the highest proportion on investments
with 57%. These range from single
family homes to large scale apartment
complexes. Commercial property,
including mainly retail and office space,
accounted for 26% of investment
offerings. The remaining 17% consisted of
mixed use developments.
Property Type (2014)
Source: Intelligent Partnership
Minimum Investment Levels
The minimum investment (capital
required to invest) shows how accessible
the real estate crowdfunding market is.
Data was collected from several platforms
from across the world in local currencies
and have been converted to USD [x1.70
for GBP] for analysis purposes.
Equity crowdfunding is generally higher
Domestic Equity
Foreign Developed Equity
Emerging Market Equity
Debt
Equity
Co-Invest
Real Estate
US Treasury Bonds
US Treasury Inflation -
Protected Securities
30%
15%
5%
15%
15%
20%
40%
38%
23% Commercial
Residential
Mix Use
26%
57%
17%
Domestic Equity
Foreign Developed Equity
Emerging Market Equity
Debt
Equity
Co-Invest
Real Estate
US Treasury Bonds
US Treasury Inflation -
Protected Securities
30%
15%
5%
15%
15%
20%
40%
38%
23% Commercial
Residential
Mix Use
26%
57%
17%
Equity
Debt
Minimum
Minimum
Maximum
Maximum
Average
Av rage
US$5,000 USD
US$1,000 USD
US$250,000 USD
US$8,400 USD (5000 GBP)
US$25,600 USD
US$7,000 USD
Americas
UK
EMEA Asia Pac
US and