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Real estate crowdfunding is booming in Bordeaux

Real estate crowdfunding is on the rise, with more than $400 million collected in 2019, double the previous year’s figure. Jérémie Benmoussa, founder of the Fundimmo platform explains the risks and advantages of participatory financing. Real estate crowdfunding is a niche market with great potential. All platforms are independent and not owned by any developer.

Desmond O'Flynn

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Participatory real estate financing, which is used by developers to partially finance their construction programs, is booming. It grew by 157% in New Aquitaine last year! Two-thirds of this regional increase is concentrated in the Gironde region, and for the most part in Bordeaux area.

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Real-estate crowdfunding

A new lever designed to financially close the deals launched by developers, participative real estate financing is developing at a high speed in France and explosively in New Aquitaine. The 2019 barometer of real estate participatory financing by Fundimmo, a French platform dedicated to this type of fund-raising, which surveyed 28 real estate crowdfunding platforms in collaboration with HelloCrowdfunding, showed that New Aquitaine real estate developers raised $37.6 million (€33.2 million) through this mechanism last year. This represented a record increase of 157% compared to 2018!

“This very strong trend is also found in other regions, with New Aquitaine in fourth place nationally, behind Ile-de-France, at +226%, Reunion Island, which is up +206% and the Grand Est, at +189%. The trend in New Aquitaine is identical to that of Provence-Alpes-Côte-d’Azur,” said Jérémie Benmoussa, chairman of Fundimmo’s management board. It should be noted, he continued, that of the $37.6 million (€33.2 million) collected in New Aquitaine, two-thirds were collected in Gironde, with $25.4 million (€22.5 million)! This is thanks to the strong dynamism of Bordeaux Métropole. The other major regional market is in the Basque Country: $6.92 million (€6.11 million) was collected in Pyrénées-Atlantiques.”

The number of promoters has doubled

If to look at the evolution of this real estate participative financing in volume, here again, New Aquitaine is in fourth place nationally with its $37.6 million (€33.2 million), behind Ile-de-France $186 million (€164.2 million), the Auvergne-Rhône-Alpes $68.7 million (€60.7 million) and Provence-Alpes-Côte-d’Azur $43 million (€38 million) regions. The Grand Est occupies fifth place, at $24.58 million (€21.7 million), ahead of Occitania $20.95 million (€18.5 million), the Pays-de-Loire $11.44 million (€10.1 million), Réunion $7.24 million (€6.4 million), Centre-Val-de-Loire $6.9 million (€6.1 million) and, in tenth place, Normandy $4.41 million (€3.9 million).

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“This trend is more favorable as the increase in inflows follows the trend in market activity. Until 2018 there were 35 property developers benefiting from this type of financing and this group has been enriched by the arrival of 30 additional professionals in 2019 alone”, said Jérémie Benmoussa.

2020 visibility in real-estate

Rumors of a slowdown in collection in 2019 did not really have an impact,” he added, adding that he believes that 2020 should remain a good year.

If the boss of Fundimmo makes this prediction, it is because participatory real estate financing operations are taking place three to six months after the building permits have been cleared of any recourse, which already provides fairly good visibility for 2020.

Superior performance in New Aquitaine

“Real estate crowdfunding is a niche market with great potential. All our platforms are independent and not owned by any developer. This market, which is only five years old, is still very young,” said the chairman of the management board. New Aquitaine savers who opt for this type of investment in New Aquitaine can expect an average annual return of 9.5%, compared with 9.2% nationally, for an average investment period of 19.1 months (21.3 months for the national average).

In 2019, the latter was reimbursed $13.36 (€11.8 million) in New Aquitaine, a good +74% compared to 2018, which represented 20 projects. The average amount per collection was $583.9 (€515.666), 25.2% less than the national average.

“All the lights are green for bonds, where there are no particular warnings. In detail, it can be stated that savers invest $1,788 (€1,581) on average and that the default rate on these operations is very low since it does not exceed 0.57%. This makes real estate crowdfunding a fairly safe product,” observed Jérémie Benmoussa.

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(Featured image by Guillaume Flandre via Unsplash)

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First published in LA TRIBUNE, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Desmond O’Flynn believes in minimalism and the power of beer. As a young reporter for some of the largest national publications, he has lived in the world of finance and investing for nearly three decades. He has since included world politics and the global economy in his portfolio. He also writes about entrepreneurs and small businesses, as well as innovation in fintech, gambling, and cannabis industries.