Reporting the Strength of Real Estate Crowdfunding

By Georgina McCreadie on 10th March 2015

P2P/Marketplace LendingEquity Crowdfunding

A comprehensive report on Real Estate Crowdfunding has been published by Massolution. The report offers a great insight into the real estate space and highlights the fact that real estate is one of the fastest growing areas of the crowdfunding industry.

Reporting the Strength of Real Estate Crowdfunding

Key facts from the report include:

  • Real estate crowdfunding grew by 156% in 2014, just breaking the $1 billion mark, with campaigns ranging in size from less than $100,000 to over $25 million
  • In 2014, North America stood as the largest region by funding volume at 56% market share of the real estate crowdfunding space, compared with Europe at 42%
  • By 2015 Massolution forecasts that North America will retain its lead, reaching $1.4 billion in funding volume, but Europe will have just broken the $1 billion threshold.
  • Real estate crowdfunding is expected to increase by 150% equalling $2.57 billion in 2015, making it one of the fastest-growing industry segments of crowd capitalism
  • This year US commercial and industrial property crowdfunding should increase by 250%
  • Growing investor interest in crowdfunding platforms is now causing competition with the traditional banking sector

Carl Esposti, founder and CEO of Massolution, commented:

"The intersection of real estate and crowdfunding is enabling a huge leap within the industry away from the old property syndication model to new intermediate marketplaces, further proliferating this model around the world."

The report also highlighted how real estate crowdfunding is spreading out of the US and into other markets. One platform that is already operating across borders is Wealth Migrate. Wealth Migrate has currently facilitated more than $1.3 billion since inception in real estate transactions across five continents.

Scott Picken, CEO of Wealth Migrate, said that the report,

“Illustrates the how the real estate crowdfunding industry is becoming more prominent and the staggering growth it has enjoyed so far”.

However, he stresses that readers need to look “beyond the numbers” and realise the disruption that crowdfunding is causing to established institutions. The level of transactions going through real estate crowdfunding, about $1 billion, is just the tip of the iceberg compared to the size of the rest of the industry.

Scott enthused about the huge potential that real estate crowdfunding has. Currently only 12.9% of people in the world have access to real estate. He sees real estate crowdfunding as the innovation that will democratise access to real estate. Currently the minimum investment in Wealth Migrate is $10,000 but Scott hopes that it will go down to $1 via changes in technology opening up an investment class that has previously been inaccessible.

He added:

"It is important to expand a real estate investment portfolio beyond your own backyard in order to access the global investment community for greater capacity, reduced risk and sustainable growth."

The report and the strong performance from the crowdfunding platforms shows that the industry has great potential and should continue to grow rapidly. However, reaching this potential will be difficult as the main issue the industry faces is becoming better known and entering into the mainstream for investors, as currently crowdfunding is such a small proportion of the real estate industry. But this is set to change and research like the Massolution report will help the industry become the obvious choice for investors. 

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Companies in this Article:

Wealth Migrate