It would be hard to publish a market perspective on real estate today with tackling the emerging industry of real estate crowdfunding. This new approach of raising capital for real estate projects is one the leading segments of the investment crowdfunding industry. Investors have the opportunity to invest in a lower risk vehicle that may generate solid returns in an asset class that is easier to understand. PWC and the Urban Land Institute (ULI) have published a wide ranging report on trends in real estate in the United States and Canada. The over one hundred page document covers top markets, property types, and the current booming cycle. As for crowdfunding this “trend” merits a mere mention in the extensive document. The authors state;
“Crowdfunding is touted as a movement democratizing invest- ment in real estate. Interviewees have seen it in action for small projects at the local level, but find it untried at scale. They expressed concern about outsourcing risk to a “crowd” ill- prepared to accept it and believe that more consumer protec- tion and regulation lie ahead.
“It does no good to just ignore the phenomenon. It is out there, and the buzz will intensify.”
“Nonetheless, real estate practitioners appear skeptical.”
Crowdfunding real estate for both debt and equity is in its infancy today. One platform has raised over $73 million in equity crowdfunding in a short time span. I will harbor a guess that next years report will have a different spin on this new approach to capital formation. But we will have to wait until next year..
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