Real Estate Crowdfunding Increased by 60% in Q3 2021 Compared to 2020

In the first three quarters of this year, in fact, equity and lending crowdfunding platforms dedicated to real estate projects have collected $77.3 million (€66.6 million) compared to $48.5 million (€41.8 million) in the same period of 2020, with a growth, therefore, equal to 60%.

In particular, in the first 9 months of 2021, real estate equity crowdfunding platforms raised $32 million (€27.5 million) compared to $21 million (€18 in 2020, a growth of 52.7%, while real estate lending crowdfunding platforms reached, in the same period, $45.4 million (€39.1 million compared to $27.6 million (€23.8 million) last year, for a growth of 64.5%.

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Real estate equity crowdfunding

In the first 9 months of 2021, 16 real estate projects were funded (there were 13 in 2020). But not only the number of projects has increased, but also the average collection: each project has in fact collected an average of $2 million (€1.7 million), while in 2020 the average collection had been just below $1.6 million (€1.4 million).

In addition, the behavior of investors is also evolving and they are evidently increasingly familiar with the tool. In fact, in addition to an increase in the average number of people investing in each project (309 vs. 292), the average amount each invests in each project has also grown $9.500 vs. $7.300 (€8.200 vs. €6.300).

The offer is also transforming, becoming more and more attractive: if the rates of return, in terms of Roi/year, are more or less constant (12.1% this year 12.3% in 2020), the average expected duration of projects is reducing (22.6 months in 2021 and 26.6 months in 2020).

However, market concentration is still high. There were 5 platforms that successfully closed at least one deal in the first 9 months of this year, equal to 2020, but more than 90% of the collection is concentrated in the top two: Walliance which raised $19.2 million (€16.5 million) and Concrete Investing which raised $9.8 million (€8.5 million).

Real Estate Lending Crowdfunding

Real Estate Lending Crowdfunding, as we have seen, is experiencing even more tumultuous growth, also evidenced by the number of projects. In the first three quarters of 2021, 172 real estate projects were financed compared to 111 in the same period of 2020, and this is the main “driver” of the growth in disbursement, given that the average collection has increased, but not so significantly ($263,700 (€227,000) per project in 2021 vs. $249,000 (€214,000) in 2020).

There are fewer investors on average, but they invest more. In fact, the average number of lenders per campaign has decreased quite substantially (148 in 2021 vs. 232 in 2020), but the average investment has increased to $2.900 (€2.500) in 2021 from $1.700 (€1.500) in 2020.

The yields offered in 2021 are almost the same as the previous year (9.8% vs. 9.7% Roi/year) and so is the average duration of transactions (11.8 months vs. 11.5), although significantly lower than in equity.

Compared to equity, the real estate lending market is in a largely expansive phase, starting with the number of platforms. In these first 9 months, the market has seen the entry of as many as 9 new operators, in addition to the 6 that were already operating in 2020. The only exception, of an opposite sign, is the Estonian platform CrowdEstate, which in 2021 stopped operating in Italy, at least in terms of real estate projects. And this translates into greater dilution, although not very marked, given that the first 4 platforms in 2020 represented 91% of the collection, while in 2021 they represented 88%.

However, the composition of the top 4 platforms has changed. In 2021, the aforementioned CrowdEstate, which had raised $4.4 million (€3.8 million, was replaced by Recrowd which, launched in 2020, had raised $447,000 (€385,000) in September 2020, while in the same period of 2021 it had already raised over $8 million (€7 million).

In addition to Recrowd, among the 4 largest platforms are confirmed Ethical Yield ( $18.5 million (€15.9 million) in 2021 vs $12.2 million (€10.5 million) in 2020), Trusters ( $9.8 million (€8.4 million) vs $5.6 million (€4.8 million)), and Re-Lender ($3.5 million (€3 million) vs $2.7 million (€2.3million) ). In addition to these, two other platforms have raised more than $1.16 million (€1 million) in these first 9 months: Bridge Asset, which last year, in its first year had raised $813,000 (€700,000), and Housers.

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(Featured Image by Pepi Stojanovski via Unsplash)

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