Real Estate Crowdfunding Gains Traction as Peruvians Seek Alternatives After AFP Withdrawals

While pension funds offer between 5% and 8% annually, real estate crowdfunding projects can reach up to 25% annually, depending on the risk and the chosen development.

The recently approved eighth withdrawal of funds from Pension Fund Administrators (AFPs) has once again brought investment alternatives for Peruvian savers under the public spotlight. With the possibility of accessing up to 4 UITs (S/21,400), the question arises of how to use this money in a way that not only preserves its value but also increases it.

In this scenario, real estate crowdfunding is regaining strength among local investors as one of the most dynamic and profitable options in the face of uncertainty in the traditional pension system, but several aspects must be taken into account first.

What is real estate crowdfunding?

In essence, crowdfunding is a collective financing mechanism in which numerous people contribute small sums of money through digital platforms to finance projects or businesses, in exchange for a proportional return.

In its real estate version, this modality allows investments to be channeled towards construction-related projects —especially social housing— from accessible entry tickets, democratizing access to opportunities that until recently were exclusive to large capital.

Real estate crowdfunding also promotes financial education among new Peruvian investors

According to Simón Vacher, co-founder of Inversiones.io, “around 1,500 people actively invest and receive short-term returns, with monthly interest payments and rates that on average generate 25% annually.”

The real estate crowdfunding system has helped to boost supply and diversify financing sources in the construction sector, establishing itself as an alternative to traditional instruments. Four key points to understand the scope and advantages of real estate crowdfunding in the context of AFP withdrawals:

1. Short-term liquidity : Unlike retirement savings, real estate crowdfunding allows access to the return on investment and invested capital in much shorter periods. Projects usually last between 3 and 6 months, which facilitates adequate levels of liquidity and flexibility in the use of the money.
2. Higher profitability potential : While pension funds typically offer returns between 5% and 8% annually, real estate crowdfunding projects can offer rates that reach or even exceed 25% annually, depending on the risk and the type of development financed.
3. Proportional and transparent investment : Users invest tailored amounts, receiving a proportional return and transparent information on rates, indicators, and the performance of each project. Transparent management is a decisive factor for those seeking alternatives to the traditional pension system.
4. Financial literacy development : By actively participating in the selection and monitoring of projects, investors acquire new skills in risk analysis and portfolio management. This learning fosters a more conscious and responsible relationship with the money available after withdrawing from their pension fund.

Experts like Juan Alberto Abanto Bustillos from UTP warn that the key lies in comparing risks and investment horizons, emphasizing that crowdfunding is a flexible tool but not risk-free. This approach is expected to grow by 2025, positioning itself as a relevant channel in the discussion about investment and savings alternatives for those accessing AFP (pension fund) withdrawals.

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(Featured image by Aarom Ore via Unsplash)

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

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