Thanks to Neha and the team at Dealindex, for the invite to join their latest report, Democratising Finance 2015 report, we @ InvestaCrowd were grateful to be featured and shared out thoughts on where this is all going into 2016.
“We are massive proponents of alternative finance and investment that simply improve process and access for the benefit of all investors. The wave of real estate crowdfunding investment is just beginning to build and we believe as an industry, in the not too distant future, its size will rival private equity and real estate funds of today. Good platforms bring quality investment projects but most importantly transparency and accountability that all the regulators are so worried about across all industries helping to protect investors, and the social fabric that ties developers and investors together through the platforms and social media connections creates a relationship where developers must execute legitimately or it will probably be there last project” Julian Kwan, CEO & Founder, Investacrowd
Could you give us insights into the Asian real estate crowdfunding industry in terms of development and the regulatory environment?
We are just at the beginning of the development in Asia and would predict crowdfunding is 7 years behind the USA/UK markets. China seems to have a few platforms in play, but these are mainly established by the largest real estate developers, which are funding their own projects. Currently there is no third party verification or oversight of listed projects and developing real estate in China requires many ‘unclear’ payments for approvals why it is hard to see how the industry will take off there or how investors will be protected. From initial views, it would seem all existing platforms are currently operating outside of what the rules say is allowed.
In Singapore it is a very different story, InvestaCrowd is second to market with a few players starting to emerge with very different strategies. Crowdfunding works best in highly regulated markets such as Singapore. The Singaporean government making moves to support the growth of the crowdfunding industry by integrating consulting papers and consumer feedback as to what would be a well balanced way forward in adjusting regulations to match the new world we live in. Malaysia has issued its first equity crowdfunding licenses, but the amount was capped and it looks that most went to wealthy connected local operators. Japan has been well ahead of the rest of Asia and has several platforms live, currently they are only focused on domestic investors for domestic real estate. We hear there are now some 18 real estate crowdfunding platforms claiming operations in Australia, however most have done no deals and still working out what is legally possible. The Australian government, is way behind the ball on this to date, hopefully there will be some improvements with the newly elected prime minister.
So it is really a different story in each country and everywhere lags way behind the growth of the industry in the USA/UK markets. The early appetite is certainly there, from both small and larger investors to invest into real estate projects, however it will take time for investors to adjust and adopt this new form of investing. There are limited investment options available for most Asian investors, especially the low to middle volume players.
What sets the Asia real estate crowdfunding market apart from the US?
The US government has now made most US investors unwanted into foreign real estate investment projects. The headache and reporting requirements to the US government for foreign projects with US investors, is simply not worth the hassle anymore for many operators/developers. Foreign investors into US real estate are also encountering more and more reporting requirements which we see as only increasing over time and making the US market less attractive than it has previously been, plus the current strong growth in prices over the past few years, has many foreign investors seeking deals elsewhere. Asia is a huge market, but very diverse and complicated. There is no “Asian” market, there are many countries with different rules and attitudes to investing.
The Asian real estate crowdfunding market will be different to the US in many ways, but to name a few, here are our predictions:
• much larger investor base willing to invest across multiple countries
• successful only in a few markets that are highly regulated and have clear rule of law and investors can be protected
• investments will be larger and globally focused
• risk appetite will be higher
What developments are you expecting for in the medium term? How likely is it that Asian countries will ease the regulations on crowdfunding?
There will be different crowdfunding rules (and some will have no rules) in each country, and there are many ways to do this business but to paint the picture we predict the countries that have already shown some interest and should continue to show support for real estate crowdfunding will include the following: Japan, China, Singapore, Thailand, Malaysia, Indonesia, Taiwan, Sri Lanka, South Korea, Australia and New Zealand. We predict the countries that won’t get it anytime this century, or are still far behind in their own development or are simply too unorganised to do anything meaningful will include: Vietnam, Philippines, Hong Kong, India, Cambodia, Myanmar, Laos, Brunei, Bhutan, North Korea.
What kind of investors use your platform?
Our “crowd” of investor members is very diverse and includes individual investors, family offices, HNW(High Net Worth), UHNW (Ultra High Net Worth), funds, and real estate companies. We currently have the early adopters, those that are switched on following the rapidly changing investment environment in the real estate industry.
Could you provide an overview of your business model, in addition to the keys to its success?
We are offering real estate developers access to new capital sources, to diversify their investor base. For investors (big and small) we are offering access to deals previously only available for those with personal connections to the developers. Our success is based on working only with the best developers with proven track records and larger projects in tier 1 locations in developed markets where rules are clear and investors are protected. InvestaCrowd typical deal sizes per deal ranges from 5 to 50 Mil USD of debt or equity. We are doing much larger deals than what the US/UK market generally does.
InvestaCrowd is a global real estate crowdfunding platform headquartered in Singapore, deals on InvestaCrowd are exclusively available to our members only. Their are limited investment positions in each deal, and investments are offered on a first come first serve basis. To see the latest offerings and begin investing today, login and create an investor account at www.investacrowd.com
See more at: http://investacrowdblog.com
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