How the Global Economy Is Facilitating the Rapid Growth of Real Estate Crowdfunding

​From $19 million in 2012 to an estimated $3.5 billion in 2016, the real estate crowdfunding sector is amongst the most active of the global alternative finance industry. Some even expect it to represent more than $300 billion by 2025. Impressive as this figure might seem, it is well within reach as real estate crowdfunding only represents a fraction of the global real estate market. 
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In 2015 for instance, the $1.5 billion of the US digital real estate market accounted for 60% of the activity globally, and this while representing only 0.3% of all real estate transactions in the country. The predominance of the US can be partly explained by the housing crash of 2007 that drove property prices down, followed by the JOBS act that paved the way for the emergence of alternative financing mechanisms to ward off the credit crunch. Naturally, leading real estate crowdfunding platforms are well-placed to benefit from this situation, but upstart firms also have room to grow and many niche segments have yet to be impacted by this shift.
 
Several trends are expected to drive the growth of the global real estate crowdfunding industry in 2017:

• Institutional involvement, Similar to the involvement of institutional investors in online lending platforms, real estate crowdfunding is becoming increasingly appealing to established investors as leading actors are now able to provide them with a sufficient amount of data for them to make an informed investing decision.
• Consolidation / Diversification, With several real estate crowdfunding platforms already out there, a consolidation of the industry is bound to take place in the near future.
• Lower entry tickets, Since the adoption of Title IV of the JOBS Act, real estate crowdfunding platforms are now able to provide non-accredited investors with an opportunity to invest in real estate, either directly or through eREITs (electronic Real Estate Investment Trusts) that can be used to easily diversify a given investor’s portfolio from potential risks.
• Global uncertainty, Macro-economic shifts underway with economic policy shifts and the consequent lack of visibility, and the consequent lack of visibility, the real estate sector appears as an attractive space to invest in with relatively low volatility and the solid value of its underlying assets.

At Crowd Valley (A Grow VC Group company), we have been actively following the global emergence and expansion of real estate crowdfunding. We’ve also assisted many clients in the creation of their own platforms, in all the major markets and across many types of asset classes. Any interested party shouldn’t hesitate to get in touch with us to benefit from our expertise in this growing industry.