Real Estate Crowdfunding

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Real Estate Crowdfunding, ,Alternative Finance Sector Report - October 2014 3
REAL ESTATE CROWDFUNDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
October 14
AUTHOR
Samantha Goins
North Amercia
$1,606m
Europe
$945m
Asia
$33m
Oceania
$76m Africa
$0.1m
South America
$0.8m
2010 $0.90 billion
2011 $1.48 billion
2012 $2.67 billion
Global Crowdfunding Volume (2012)
Real Estate
Real estate is one of the largest, most
established and best understood asset
classes. An allocation to real estate as
part of a well-diversified investment
portfolio has many benefits: capital
preservation; capital growth; regular
rental income; diversification and a hedge
against inflation.
There are two main conventional options
for ordinary retail investors considering
real estate. Direct property investments
give pure exposure to a specific project
and investing directly should provide
investors with the highest levels of control
and transparency. Successful direct
investments also have the potential for
the highest returns. However, direct
investments often require a large amount
of capital to invest; transaction and
operating costs can be high; there is no
diversification to mitigate risks and some
developments (particularly those that are
off plan) are often high risk.
Real Estate Investment Trusts (REITs)
offer a more accessible way to invest in
property, with lower minimum investment
amounts and risk spread across multiple
properties. But investors will have
little control over what properties are
bought and sold, there can be a lack of
transparency about underlying assets,
fund management costs can be high and
potential returns are much lower.
Worldwide
Source: Massolution
Low Minimum
Investment
Low Transactions
Costs
Ability to Easily
Diversify
Transparent
Investment
Control of
Investment
Directly Held Real
Estate
x x
REITS x x x
Real Estate
Crowdfunding
x x x x x
Direct Real Estate Investment Options