Property crowdfunding is a rapidly growing industry, statistics have shown.
Massolution, a research and advisory firm estimates that the global market for investments in property through property crowdfunding was US$2,5 billion in 2015 and was expected to have reached around US$3,5 billion last year.
According to a PricewaterhouseCoopers report[1], Real Estate 2020: Building the Future[2], demographic shifts will affect demand for real estate fundamentally. The burgeoning middle class populations in Africa will increase the demand for real estate exponentially according to findings of the report. It also established that private capital will play a leading role in funding the growing and changing need for real estate and its supporting infrastructure.
CrowdExpert.com, which maintains a database tracking activity across the top 35 investment crowdfunding platforms, reveals that of the estimated US$2,1 billion in United States Investment crowdfunding volume of 2015, US$900 million was in real estate crowdfunding activity. The Pensco crowdfunding report of 2015 estimates that by this year, there will be 9,5 million net worth investors in the United States alone which is an increase of 68% from 2012, with the total wealth of this group increasing by 83% to just under US$40 trillion.
These statistics show that real estate crowdfunding is enjoying tremendous growth with the potential to be one of the most popular funding vehicles for real estate globally.
The growth of this particular sector is hardly surprising given the advantages this funding vehicle provides.
It allows individual investors to buy into a real estate opportunity at a much cheaper cost with the potential for high returns.
For developers, there is the advantage that the worldwide recognition of one’s development puts them on a global platform as well as enabling them to network their project through the crowd.
From the investor perspective, property crowdfunding can provide an alternative investment as well as transparent way of investing.
The ease of using this kind of platform is also a major plus. The entire process is transacted online. Investments are tracked online through the platform’s website with investors receiving regular updates regarding the status of their property.
“We are excited about the potential real estate provides on the continent because I believe we will play a part in shaping the future of real estate development on the continent,” Realty Africa co -founder and group chief executive Patrick Chella says. “If blockchain is the democratisation of information then crowdfunding is the democratisation of investment.”
By: Augustine Chimwaza
