With 80% growth in 2019 and more than $332 million (€300 million) collected, the real estate crowdfunding market remains, this year again, the most lucrative branch of equity finance and the one with the lowest default rate in the sector, with 0.5% in the first half of 2019. With new regulations, acquisitions or business concentration, 2019 proved to be a strategic year for this mature market.
The best finance and business news from the most trusted sources in 80 words or less. Updated throughout the day, Born2Invest is a professionally curated digest of business and finance news summaries from the most reputable news organizations around the world.
A market that continues to grow dynamically
At the beginning of December, the total amount raised over the year was estimated at more than $332 million (€300 million), representing an increase of nearly 80% compared to last year. In terms of the number of projects financed, the increase is less significant but is explained by the scale of the operations offered to investors.
This trend will only accelerate beyond the new peak of $9 million (€8 million). After five successive years of positive activity, real estate crowdfunding has now found its place and momentum in the general landscape of profitable financial investments.
Its attractive yield over short periods and its capped tax rate are the two main advantages. Reimbursements are ongoing and continue to attest to the sustainability of the model and the quality of the selection processes for proposed projects.
2019: a year of strategic choices for market leaders
While 2018 had already begun to concentrate activity in the handful of platforms, 2019 confirms this gap with the consolidation of existing leaders. In January, the TIKEHAU CAPITAL asset management fund acquired Homunity. This summer, it was Atland Real Estate’s turn move into real estate crowdfunding by acquiring 60% of the capital of a platform from the leading group.
These alliances have strengthened their position and legitimacy, particularly with national and even international promoters. In 2019, Homunity raised funds of between $1 and $2.5 million for two listed companies on several occasions.
On all 30 active platforms (generalist or specialized in real estate), the leading group is now narrowing down to 8 entities that account for more than 80% of the activity. With a total of $70 million raised in 2019, an increase of 183 % compared to 2018, Homunity takes the lead among pure players in real estate crowdfunding (with more than 20 % of the market share).
2019: the official entry into force of the PACTE law in France
Announced in 2018, the implementation of the PACTE law (law on the growth and transformation of companies) provided for new regulatory changes in favor of participatory finance. The two main measures expected were the opening of the PEA-PME scheme to equity financing securities (including bonds and minibonds) and the increase in the collection ceiling, which was $3 million (€2.5 million) for platforms with CIP status.
Adopted definitively on May, 22, the decree formalizing the new collection threshold of $8 million was not published until October, 28. On October, 31, Homunity opened the largest collection with $4.8 million (€4.4 million) for a tertiary operation in Seine-et-Marne, which is collected in 20 days from more than 800 retail and institutional investors.
The PEA-PME system for real estate crowdfunding securities will be more complicated to set up. Indeed, because of the costs related to the operation of the PEA-PME (different according to your banking institution) and knowing that the scheme is interesting if the investments are kept for at least 5 years (to benefit from the exemption), the interest for small portfolios is not so obvious.
2020, the year of crowdfunding for major real estate players and institutional investors
Not surprisingly, 2020 should continue the same positive trend. In the context of declining traditional real estate yields, crowdfunding remains an attractive alternative for individual investors who want high returns for short downtimes.
By the end of 2018, new real estate players had already entered the crowdfunding market. This trend was fully confirmed in 2019 with the arrival of national operators with much higher capital requirements. Throughout the year, the previous peak of $2.5 million was regularly tested to finance either major operations carried out by national actors or directly by the promoter in order to ensure its overall development plan. This structural financing will become more recurrent in 2020.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in ideal-investisseur, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Sono Motors introduces community advisory board
Sono Motors unveiled the latest prototype of its electric minivan with solar cells in the body. In parallel with the...
Ysios Capital invests 30 million in 2020 and plans to enter four companies in 2021
In a year marked by the COVID-19 pandemic, the venture capital manager Ysios Capital carried out six follow-on operations and...
Oxxo enters the fintech ecosystem with its digital wallet Spin
On March 2nd, Oxxo presented Spin, a digital wallet through which it will be possible to manage, send and receive...
AEDESEO asks for €57,000 in crowdfunding to research a new treatment
AEDESO wants to start a clinical study and launched a crowdfunding campaign to raise the necessary money for it. Patients...
Mainz-based biotech company ActiTrexx receives €3.5 million in financing
The biotech company ActiTrexx has recently closed a Series A financing round, during which it raised $4.2 million (€3.5 million)....
Biotech7 days ago
VB Devices closes a €1.1 million round to consolidate its market entry
Cannabis6 days ago
Legalization trend drives cannabis ETFs to significantly grow
Featured7 days ago
ARisk, the startup of predictive risk algorithms, closes €350,000 round
Crypto7 days ago
Bitcoin whale alert: major investors dump large amounts of BTC