Brexit boosts launch of a new upmarket property crowdfunder

By Daniel Lanyon on Friday 29 July 2016

Savings and Investment

CapitalRise is the latest property crowdfunder to launch, aiming to give investors exposure to luxury residential homes in London's smartest postcodes.

A new London-based crowdfunding platform aimed at giving investors exposure to the prestigious properties of Belgravia and Chelsea has raised nearly £700k in its first week.

CapitalRise, is the latest venture from Alex Michelin and Andrew Dunn,  the founders of luxury property developers Finchatton. The first project, which investors can back with as little as £1,000, aims to raise £1m towards the renovation of a £8.15m three-bedroom flat in the prestigous Eaton Square, Belgravia.

The investment, which forecasts annual returns of 10 per cent on capital, has received £647k in the first few days.

The number of super-prime - £10m plus -  property transactions in London fell by a third in 2015 as the impact of a stamp duty increase at the end of 2014 made buyers more prices sensitive, according to Knight Frank. The stamp duty increase meant the transaction tax on a £10m property rose to £1.1m from £700k, or an additional 4 per cent of the sale price.

So far in 2016, however, their has been no sign that the slowdown has hit prices for the market or that Brexit has prompted a rush to the door by foreign buyers who have been an important driver of demand in the past decade. 

Chief executive officer Uma Rajah is a former product designer at Wonga says Brexit has actually increased interest in Capitalrise due to the induced volatility in equities and sterling since the referendum vote.

Rajah said: “With a reported 21per cent of UK adults earning 0.5 per cent or less interest on their savings due to low interest rates and limited product choices, many savers are looking for other or additional options. Real estate has historically been one of the best performing asset classes2 to invest in but the higher grades of investment were previously only on offer to institutions or high net worth investors.

“At CapitalRise, we are determined to change this and give everyday investors access to a new profile of investment which could generate returns of 10-18 per cent.”

Investors have been able to invest in both commerical and residential property through both open and closed ended mutual funds for many years although the former have been hard in periods of market stress such as 2008 and in the past month, as investors have made large redemptions and the funds have struggled to meet their obligaitons. They aslo charge fees, something that CapitalRise says it does not do. 

The first project aims to raise £1m for the refurbishment of a grand 2,400 sq ft, three-bedroom apartment with 12ft high ceilings, its own grand entrance hall and a private garden with an estimated 18 month time horizon and a 15 per cent estimated total return, paid quarterley. On sale of the propery capital is repaid. 

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