After a first-quarter marked by record inflows and repayments and then a significant slowdown during the first phase of containment, the French real estate participatory financing platform Fundimmo confirms the resumption of good momentum in the real estate crowdfunding market. A trend that should be confirmed and even amplified with the holding of municipal elections at the end of June.
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In the first quarter of 2020, the real estate market registered record inflows
With record inflows in Q1 2020 ($106.8 million (€95 million), up +106% compared to Q1 2019), the market should continue to grow or at least stabilize despite the COVID-19 crisis. The same is true for the yield, which should maintain its attractiveness and strengthen the positions of this savings product as a preferred diversification investment.
Although the completion time of real estate programs could be extended following delays in construction sites due to the health crisis, this does not constitute a warning signal, as private individuals’ interests continue to accrue when projects are delayed. The average delay for projects that will actually be behind schedule is expected to be around four months for projects that will have to be repaid within the next 12 months.
“Tomorrow’s real estate will have to take even greater account of external factors affecting the completion of construction sites,” said Jérémie Benmoussa, Chairman of Fundimmo’s Management Board. “This may lead to a slight extension of financing terms in the coming years, but rates should change little in the immediate future. In any case, the confinement has proved that digital has more than ever a place in the investment universe, especially for platforms like Fundimmo that can remotely support savers and real estate operators, proof of the resilience of this model. Let’s hope that the public authorities allow the real estate sector to continue the recovery that has begun under the best conditions, so that this fast-growing market can continue to develop on solid foundations,” Benmoussa concluded.
Investors are returning to the crowdfunding platforms
After a first quarter marked by a collection of $10.3 million (€9.2 million), four times higher than the first quarter of 2019, and a tripling of reimbursements $4.72 million (€4.2 million), the entry into force of the containment measures has led to a suspension of collections by Fundimmo for a few days. With 12 projects financed since the platform was reopened on April 14th, representing a total of $13.5 million (€12 million), this first post-confinement assessment shows that investors are returning to this product. Several new collections are planned by Fundimmo for projects awaiting administrative release between now and the municipal elections.
“The first half of the year should confirm that real estate crowdfunding continues to grow despite the difficulties that the real estate sector has had to face during this crisis,” explained Jérémie Benmoussa. Investors are returning to the platforms, proof of their renewed confidence in this type of investment, which offered an average return of 9.2% per year last year. Developers need financing more than ever to carry out their projects.
“They are still responding, and now that construction is gradually resuming and a date has been set for municipal elections, the market is staying the course. Recourse to real estate crowdfunding remains a major growth lever for real estate operators at the moment, both to relieve their cash flow and to quickly obtain the equity needed to refinance or launch operations.”
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First published in BUSINESS IMMO, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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