Real Estate Crowdfunding

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Real Estate Crowdfunding, ,Alternative Finance Sector Report - October 2014 14
REAL ESTATE CROWDFUNDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
October 14
AUTHOR
Samantha Goins
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Real Estate Investment SWOT
Strengths
Provides diversification from mainstream financial assets
Portfolio benefits such as hedge against inflation and
steady regular income
Weaknesses
Lack of liquidity in the sector
High minimum investment costs
High transaction costs
Regulatory barriers in some countries
REITs are unclear about the underlying properties
Possibility of under or overvaluing the underlying property
Opportunities
Emerging countries and economies may provide stellar
returns
High rate of competition to drive out bad investment
opportunities
Alternative finance to bridge the weakness and give more
investors access to this asset class
Threats
The economic health in parts of the world
Changes in supply and demand
Market ‘bubbles’
Threats
Regulatory scrutiny
Banks are of a much larger size
New lending institutions taking over the sector
Lack of regulation
Alt Fi Sector SWOT
Strengths
The availability of capital
Large amounts of deal flow
The ability to ‘test’ the market with an idea
Increased investor engagement
Usually cheaper transaction costs
Open data for clear investing environment
Strong investment returns possible
Monitoring investments live online
Weaknesses
No secondary market at present
Higher risk
Possibility of bad investment offers as companies want to
capitalise on the crowdfunding hype
Opportunities
Vast amounts of possible applications for alt fi concept
Possibility of secondary market
New investment locations