From the 5th report on real estate crowdfunding of the Politecnico di Milano, excellent development scenarios are expected for Italy in this particular sector, also in the two-year period 2020/2021.
Lending crowdfunding has continued its rise as the fastest-growing segment in the crowdfunding landscape. This is mainly due to the capital of institutional investors. The platforms are growing and their number is increasing, and a considerable growth in the loans disbursed is expected, mainly in the business part.
Real estate crowdfunding could at the same time become a complementary tool in the choice of financing for real estate projects, and could even be used to leverage bank credit.
Born in 2012 in the USA on the wave of a real revolution, the crowdfunding real estate sector has evolved to count as many as 100 platforms active all over the world, with a collection of investments of 2.1 billion euros only in Europe and an investment volume that tripled in 2017. In Italy, in fact, real estate crowdfunding seems to be the fastest-growing sector in the entire crowd investing world.
The far-sightedness of the legislators meant that our country was, in 2013, the first nation in Europe equipped with specific legislation for equity crowdfunding. Furthermore, with the 2017 Stability Law, the activity has also been extended to SMEs, which can now count on a new credit access tool.
As highlighted by the researchers in the report, among the advantages of the new method of raising real estate capital there is the greater ease of participation by small investors: in many projects we start with a minimum amount of 500 euros, with the opportunity for them to diversify investments in a market that normally provides for much more complicated and bureaucratic access.
Real estate crowdfunding: the current situation
Among the latest and most interesting real estate crowdfunding projects, we point out the one launched by Concrete Investing, a real estate equity crowdfunding portal, whose recent campaign (July 2020) will finance the Washington Building project: a new residential complex of over 13,000 square meters located in Piazzale Irnerio in Milan, already sold, and which has about 100 residential units, including urban villas and penthouses.
From the data provided by Concrete Investing, this project provides for an Internal Rate of Return (IRR) of 13.6%, a Return On Investment (ROI) of 40.4% and a holding period of 32 months.
As Giacomo Bertoldi of Walliance states, “real estate is proving to be a market of great interest for equity crowdfunding. There are many ready-to-go operations; the reception from both operators and investors is very good. Crowdfunding is recognized as an excellent complement to the financing mix of real estate projects “.
Globally, Real Estate Crowdfunding was able to reach a total of 11.9 billion dollars raised in 2019, of which 8.4 in America, 1.8 in Europe, and 1.7 in Asia. In 2019 alone, Italy recorded the collection of 35 million euros for projects related to both equity and lending crowdfunding, solely in the real estate sector.
What is crowdfunding? The differences
1. Equity crowdfunding
In general, equity crowdfunding is, more than fundraising, the process by which it is possible to buy shares, shares or other financial instruments offered by a company. In this way, by investing your own money, you become a partner in that same company, and if this happens in the real estate sector we speak of real estate equity crowdfunding or real estate equity crowdfunding.
2. Lending or “peer-to-peer” crowdfunding
In lending crowdfunding platforms, also called “peer-to-peer” crowdfunding, the adherents participate in the purchase of the advertised asset by not intervening directly on it as investors, but by financing companies that will subsequently invest (this time directly) in that project. What the members get, in this case, is an annual return on the basis of the agreements that are signed on the platform, which vary from project to project.
Equity crowdfunding in Italy
Even in Italy, the equity crowdfunding model (we are not just talking about real estate) has recently gained the headlines, managing to collect 39 million in the first half of 2020, despite the lockdown, and thus establishing a new record (40% more than in 2019!).
Much of the credit must be attributed to the main platforms active on the market, which have been able to attract the interest of companies and private investors, giving impetus and opportunities for growth to the entire industry.
As of June 2020, CONSOB has 42 authorized platforms in Italy, and the models adopted by the individual players are varied, with different operating mechanisms. There are generalist platforms and specialized platforms, which concentrate their core business in raising capital for SMEs and innovative startups, or for more mature companies and SMEs with structured businesses.
The research group “Entrepreneurship & Finance” at the School of Management of the Politecnico di Milano and active in the promotion of the Crowd-Investing Observatory, has recently developed the Italian Equity Crowdfunding Index, a synthetic index of the appreciation of value, dedicated to those companies who have conducted more than one funding round after raising through equity crowdfunding.
Real estate equity crowdfunding – The Walliance case
Speaking precisely of this second category of platforms, we report with enthusiasm an actor who is now consolidating itself on the specific real estate crowdfunding market, (first in terms of numbers in Italy) with 23.3 million euros collected so far, 18 projects and a highly selected network. of more than 5,000 investors.
We talked about it just now in the context of national current affairs. Walliance is the first real estate equity crowdfunding platform in Italy, on the market since September 2017, which allows you to invest in real estate properties behind the proposal of bidders. The platform is essentially based on three principles:
1. Transparency: Walliance makes all the terms of the investment proposals fully visible to potential investors;
2. Accessibility: the minimum investment fee is 500 euros, therefore certainly not prohibitive, and payments are simple as it is possible to make them either by credit card or by bank transfer;
3. Flexibility: there is a varied range of projects for the benefit of those interested in investing, and for each one it is possible to consult the corporate (and individual!) Documentation of the project bidder, the business plan of the initiative, with in-depth analysis of course also on what is the expected return on an investment “X”.
When the investment is made, the capital is deposited in a partner bank of Walliance, the Finint (Finanziaria Internazionale), and made available to the offeror. Subsequently, the investor will receive a series of updates on the crowdfunding trend and only at the end of the investment, will the investor be given the return of the deposited capital, possibly increased by the yield achieved.
What do we think are the main success factors of Walliance? That speaks a clear language, understandable even for non-experts in the real estate sector or for people less accustomed to the technological field, as well as the ease of use and usability of its online platform. Through this brilliant strategy, the concept of real estate crowdfunding has been made simple and within the reach of an increasing number not only of institutional investors and investment funds but also of individuals seeking diversification for their savings.
Real estate lending crowdfunding – The Housers case
Based on what has just been explained, Housers is a real estate peer-to-peer crowdfunding platform, so those who join it do not obtain, as in the case of Walliance, a share in the purchase of the property, but an annual return in relation to the signed agreements.
Real estate investments made on the portal, defined as lending crowdfunding agreements or contracts, can subsequently be resold by the investor in a specific Marketplace.
Tono Brusola, the former CEO of Housers, recently stated: “Our idea is to make Housers the first real estate investment platform in Europe, thanks to which, starting from 50 euros, anyone can invest their savings by building a source over time. of alternative income to traditional ones “.
It is in fact true that the minimum investable amount is only 50 euros, which makes the service accessible to practically anyone, as Brusola says. And the platform of Spanish origin is already making space also in our peninsula, as a showcase for interesting opportunities in the real estate market, mainly residential but also concerning properties to be rented or renovated and then resold at a higher price. Often the return (“capital gain”) is in fact obtained from the income from the property, or from the collection of rents.
Also in this case it is possible to make payments by bank transfer or more immediately by credit/debit card, while the payment process is guaranteed, in order to deposit and transfer funds in a safe and transparent way, by Lemon Way, an online payment institution.
To date, the Housers platform, operating internationally, has only 39 projects in Italy, 20,419 investors and an average investment of 600 euros.
PlaceUp, crowdfunding for the recovery of the building stock
We were also struck by a new real estate crowdfunding platform owned by the Materana company Slowfunding Srl, which starts from the commendable concept of recovering the priceless Italian real estate heritage, with the aim of rehabilitating properties of historical and architectural value that are in excellent conditions. disuse and neglect. A very common situation in our country.
On the one hand, PlaceUp offers owners the opportunity to enhance their properties, which too often turn from stable value into a source of unsustainable expenses due to high real estate taxation, through a project that tells the story of the place and the potential associated with the renovation. and reactivation of the property; on the other hand, taking advantage of the crowdfunding system, it gives interested parties the possibility of investing in the co-ownership of properties to be used as income and from which they can therefore derive an advantage in purely economic terms, it is obvious, but without neglecting a romantic and philanthropic note.
Thinking that there is a real estate crowdfunding platform that spreads the culture of reuse also in real estate and that marries the causes of sustainability and the fight against the environmental impact caused by urbanization, in a country rich in natural beauty such as Italy, certainly induces us to wish PlaceUp long life!
Do you have a property to recover and activate?
If you think that the possibility of proposing properties to be recovered is reserved only for a few, you are wrong. On the PlaceUp website (as in the other platforms) there is in fact a section in which any person is able to send their proposal for the sale, recovery, or reactivation of a property or real estate complex.
Just register on the portal and, following the procedure indicated, enter all the information about your property and upload the required material. When the platform team has analyzed the material received, you will be able to find out if the property is suitable for starting an equity crowdfunding campaign.
It will be the responsibility of the same team, in the subsequent steps of preparation, launch and conclusion of the campaign, to follow you in all the procedures to ensure that it can make the most of its potential and finally have the desired success. Certainly an excellent opportunity for a real estate agent who seeks to expand the services to offer to his customers, in a country such as Italy, full of properties of high historical, architectural and environmental value to which to give new life.
Trusters, real estate crowdfunding within everyone’s reach
2019 saw the birth of a 100% made-in Italy real estate crowdfunding platform, which began with the brilliant closure of two operations in Milan. Trusters – this is the name of the fintech platform – is aimed on the one hand at small investors, who will be able to start putting their savings to good use starting from the modest expense of 100 euros, on the other, obviously, also to professionals in the real estate sector and investors. institutional, placing itself as “real estate crowdfunding within everyone’s reach”.
On the platform there are space for urban redevelopment projects, auction properties, changes of intended use, divisions with renovations, all with an interesting peculiarity: these are structurally not complex and also very fast real estate transactions, characterized by a time horizon that goes from 9 to 18 months, therefore very short. The operations, concluding in the short term, are able to generate profits quickly.
Since December 2018, 56 real estate investment projects have been financed through Trusters, with total fundraising of over 5.6 million euros.
The intention is to create collaborations with independent real estate agencies and franchises from the north to the south of the country, the ambition is to give life to a project that returns the highest rate of return of the entire real estate crowdfunding circuit.
The COO and founder Andrea Maffi says he is convinced that crowdfunding, within a few years, will go from a mere alternative investment tool to a fundamental financing system for the entire real estate sector.
And it is news of December 2019 that Trusters will be the first crowdfunding platform to adopt the blockchain in Italy, to track and guarantee the presentation and negotiation activity within its portal. This will be possible thanks above all to the partnership with the Swiss company Swiss Crowd, the first ever to have created a blockchain solution for real estate certification.
How can I compare platforms and real estate projects?
We have found a platform, BrickFunding, which allows you to consult a complete and detailed list of all the real estate crowdfunding platforms in the world, also assigning them a ranking (the classic “stars”) based on user evaluation.
On the platform it is possible, in addition to comparing the platforms with each other, to put them in competition to find out which is the most suitable and most profitable real estate project on which to invest based on your economic possibilities and current needs.
To stay up to date on the various statistics and data relating to the world of equity and lending crowdfunding in Italy, we recommend that you take a look at the CrowdfundingBuzz infogram, which is updated in real-time and allows you to have an all-round view. of the Italian real estate crowdfunding landscape.