The health crisis has hit the entire real estate market and more particularly the real estate development sector. As a result of the containment measures, construction sites had to be interrupted on March 17th for several weeks. How has the real estate crowdfunding sector been affected by this crisis and what will be the consequences for savers in the coming weeks?
If you want to find out more details about the effects of the coronavirus crisis on the real estate crowdfunding sector and to see how some projects financed through crowdfunding campaigns had to be delayed, download for free the Born2Invest mobile app. Read the latest financial headlines in the world, and stay on top of everything that matters to you with our companion app.
The risks of investing in real estate crowdfunding
When a property developer launches a construction project, it sets up a company dedicated to managing the construction and marketing of the real estate program. To finance itself, the company borrows from individual investors via the real estate crowdfunding platform. In return, savers recover their investment at the end of the project, plus loan interest.
The two main risks of this type of investment for the saver are the risk of default (the developer is unable to repay the loan and the savers then lose all or part of the savings invested) and late repayment (the real estate project is delayed and the saver is repaid after the date initially planned).
What is the impact of the health crisis on the real estate crowdfunding market?
With the containment measures, construction sites had to be interrupted on March 17th for several weeks, only to resume gradually in mid-April. Some projects financed via crowdfunding platforms have therefore been delayed. In addition, since investors are only repaid at the end of the project, they will have to wait before they can recover the sums lent and the interest.
“Projects that were to be repaid between April and June will be four months late on average,” explained Jérémie Benmoussa, chairman of the management board of the Fundimmo platform. However, the wait will be rewarded since “interest continues to accrue on the months of delay” he said.
The figures at the end of June
It will, therefore, be necessary to follow the evolution of the overdue rate and the default rate over the coming months to really measure the impact of the health crisis on the real estate crowdfunding.
At this stage, according to the latest figures available on the HelloCrowdfunding website, the market is doing well. Between January and June 2020, real estate crowdfunding platforms have enabled projects to be financed to the tune of $178 million (€159 million), i.e. 13% more than in 2019 over the same period.
The average amount raised is up 23% compared to last year $865,589 (€772,282 on average). The average rate of return was stable at 9.3%, as was the average project duration (21 months). The average market delay rate is around 3% and the default rate is 1%.
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 Boursorama, 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.
The first national clinical trial of a COVID-19 vaccine is now underway in Chile
The clinical trial, led by the Catholic University, together with other universities and the Sinovac Biotech laboratory, already has funding...
New study on the economic impact of the pandemic in Burkina Faso
A recent study conducted in Burkina Faso showed that the pandemic has negative consequences on income and food security in...
Demecan launches an online cannabis shop for pharmacies
Demecan has opened an online shop for direct sales to pharmacies. Although the Berlin-based startup is the only German company...
Could the price of Bitcoin reach $100,000 by 2021?
PlanB analyst was able to determine not only the current and future scarcity/hardness of BTC, but also a possible Bitcoin...
Zadar Ventures Ltd. confirms much anticipated move into the booming VR & AR market segment
An exciting development in the world of virtual and augmented reality: Zadar Ventures Ltd. (TSX.V: ZAD, OTC: ZADDF Frankfurt: ZAV0.F)...
Featured6 days ago
Supply@Me Capital ready to close the first securitization of the overall €970 million program
Africa5 days ago
Rwanda will build a nuclear research center
Cannabis6 days ago
Medterra enters into a strategic partnership with Megalabs
Crypto7 days ago
The rise in Bitcoin’s price made 95% of the investment in cryptocurrency profitable