Who will be the winners as real estate crowdfunding grows?

by AB15 Sep 2015
Developments that are too big for typical mum and dad investors, yet too small to be considered by major financial backers could be the big winners from the growth of the real estate crowdfunding sector.

Launched in 2013, Singapore based crowdfunding platform CoAssets is described by its founder and chief-executive, Getty Goh as the “Kickstarter of property,” with people able to pledge as little as $1,000 towards projects.  

Unlike Kickstarter Goh said CoAssets gives people a chance to walk away with “not just a product, but a return on their money,” but while the platform may give people with limited funds a chance to invest they may otherwise not have, Goh said it could be an even bigger advantage to developers.

“It (crowdfunding) definitely helps people who want to invest but only have a small amount of money to play with, but we think we can have a big impact for developers,” Goh said.

“There’s a current funding gap at the moment that we hope to close, we’re talking about developments in that $1 million to $5 million dollar range who are too big for normal investors, yet too small for the big investment businesses to look at and because of that a lot of projects fail to materialise.

“Think of someone like a normal investor who might have built a house and sold it and now wants to move onto a multi-unit project but can’t get funding, they can make a CoAssets account and tap into funding they otherwise wouldn’t get the chance to.”

While the concept of CoAssets or other proptech platforms like the Australian based CrowdfundUP or BrickX may seem a world away from what people consider as the norm in property investing, Goh believes they are just an extension of what has been happening for years.

“Really what we’re doing is nothing new, the concept of crowdfunding real estate has been around for ever, whether it’s a husband and wife buying their first home or other people teaming up to buy together.

“All we’re doing is making it so people can do that with people they don’t know and wouldn’t get to know, we’re just opening it up to a wider pool of people to buy or sell to.”

Whilst CoAssets is listed on the NSX, Goh said it is still in the process of opening its opportunities to Australians.

“Australia has a vibrant, knowledgeable property investment community and in some ways we see it as the home of CoAssets.

“Along with China, Malaysia and Indonesia it’s a location we are looking to open an office in and we are in the process of meeting the legal requirements in Australia so we can roll out our opportunities here.”
 

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