While startups and SMEs’ raising through equity crowdfunding in 2022 suffered a setback for the first time, real estate crowdfunding still marks impressive growth.
Indeed, in 2022, real estate projects raised a total of €145.37 million, including €54.97 million through equity crowdfunding platforms and as much as 90.4 with lending platforms.
In 2021, the total raised was €99 million, split between €41.3 from equity and €57.7 from lending, with the sector thus growing 47 percent.
Clearly, while both are growing, the dynamics of equity and lending are profoundly different. So, we analyze them separately below.
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Equity Crowdfunding in Real Estate
While the growth in funding was 33 percent, the number of projects funded was about the same: 25 in 2022 and 24 in 2021. So the growth was mainly attributable to the average collection per project, which increased from 1.7 million in 2021 to 2.2 million in 2022.
Another element of growth was the average investment, which increased from 8,100 in 2021 to 12,400 in 2022, also discounting a reduction in the number of investments decreased in 2022 by about 1,000 compared to 2021 (6,000 vs. 7100).
The two largest specialized platforms, Walliance and Concrete Investing, are increasingly leading the way. In fact, their combined collection is worth 93 percent of the market, up from 91 percent in 2021. Walliance’s collection grew by 15 percent (from 28.6 to 32.8 million) and Concrete Investing’s even doubled (from 9 to 18.2 million).
In terms of platforms, an interesting dynamic should also be noted. Two new specialized platforms, Bildap and Brick Up, entered the market in 2022, which, together with Build Around and the two already mentioned, brought to 5 the number of specialized real estate platforms that launched at least one successful campaign in 2022. In 2021, there had been 3, and the others that had raised were generalist platforms-Mamacrowd, Crowdfundme, and Backtowork.
Of them, the latter did not launch campaigns on real estate projects, and Crowdfundme operated in the first half of the year and then decided to expand its real estate positioning by acquiring Trusters, a lending crowdfunding platform.
Finally, in terms of expected return on investment, campaigns launched in 2022 promised a significantly higher rate on an annual basis than in 2021: 12.7 percent versus 11.9 percent.
On the other hand, the expected holding period decreased slightly, from 21.2 months on average for campaigns funded in 2021 to 20.3 months for those launched in 2022.
Lending Crowdfunding in Real Estate
The collection of real estate projects through lending crowdfunding platforms is booming. During 2021, the sector registered an increase of 57% (that of 2021 over 2020 was 59%).
The other overall ratios are also positive. The number of funded projects increased from 248 to 329, with the average collection also growing to €275,000 compared to €233,000 in 2021.
And evidently, investors know and increasingly trust this asset class, if we consider that the average investment was €3,200 compared to €2,700 in 2021 against a number of investments that grew from 37,000 in 2021 to 53,000 in 2022.
The market is concentrated, but not as much as the real estate equity market. In fact, for lending, the top 3 platforms (Recrowd, Ethical Yield, and Trusters) accounted for 80% of the funding in both 2022 and 2021.
Compared to equity, moreover, the number of platforms that closed at least one successful campaign in 2022 is much higher. Moreover, a stable number compared to 2021, 16 versus 17 (in 2022, one new platform, Demetra Lending, was launched, while two did not raise, Housers and Business Lenders).
The three leading platforms all grew compared to 2021, Ethical Yield by 19 percent, Trusters by 30 percent, but, most importantly Recrowd, which, with a growth of 141 percent raised 32 million in 2022 alone, establishing itself as the second largest platform in terms of raising in the entire real estate crowdfunding market, after Walliance.
Among the “follower” platforms, 5 out of the 8 launched in 2021 have fulfilled their promises, increasing their collection: Build Lenders (1.9 million), ITS Lending (1.6 million), Crowdlender (1.5 million), Prepay (0.8 million), Isicrowd (0.3 million).
The three platforms launched in 2020 also confirmed their growth and accelerated it: in 2022, Bridge Asset raised 5 million (+100%), Italy Crowd 2.2 million (+200%), Invest-t 0.5 million (+62%).
Among the leading platforms, only Re-Lender raised less than in 2021 (2.9 million vs. 3.3), but it should be remembered that the portal specializes not only in real estate projects, but also in business loans (as, moreover, does the aforementioned Crowdlender).
The average rate of return on investment is still 10 percent, both in 2022 and 2021, while the time horizon of loan duration has slightly shortened from an average of 12 months in 2021 to 11.8 months in 2021.
Real estate investment is definitely one of the favorite asset classes for Italians, and crowdfunding as a facilitator and amplifier of investment opportunities is starting to be increasingly recognized.
Equity and Lending crowdfunding real estate are positioning themselves in an increasingly defined way: the former finances projects of larger size and with longer holding periods, the latter focuses on projects of smaller size and with returns on investment in shorter timeframes.
However, it should be noted that there are some notable exceptions: Recrowd (11) and Ethical Yield (7) have launched campaigns of projects that have raised above one million, including 3 above two million, thus bringing the two worlds closer together.
Lending platforms have operated until now under a virtually unregulated regime, encouraging their emergence and development. With the new EU regulation, which requires a complex authorization process and, above all, a much “heavier” corporate and organizational structure, smaller platforms will have to assess whether the new scenario will be sustainable or whether, instead, it will be worth seeking aggregations, also to better exploit opportunities for competition at the European level.
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 Crowdfunding buzz, 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.
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