Crowdinvesting or crowdfunding for real estate has long been considered a major potential market. However, there are a number of platforms that have downsized during the past year, even some established players like Exporo.
Notably, the first Germany-based firm that’s set to go public through a SPAC (or special purpose acquisition company) is a real estate crowdfunding platform. Berlin’s iFunded and Klickown are partnering with Investunity AG and are scheduled to soon be listed.
These companies are among many others who have joined the SPAC craze. The company has not yet provided any details regarding its plans, but its valuation should not be too high. As first reported by Finance FWD, these firms are not really the most prominent service providers in the market.
These trends and developments indicate that financial managers might see an opportunity in introducing smaller investors to the real estate financing business. For instance, digital bank N26’s former CFO, Matthias Oetken, has launched a new company, called Estating. The company aims to make real estate tradable with smaller amounts. This is a key area that market leader Exporo has been focused on, according to Finance FWD.
The excitement around these new initiatives may be due to the fact that the capital markets have had a challenging year because of the pandemic and investors are looking for ways to make it through this situation. However, the total amount being invested by smaller investors has now decreased, according to data from Crowdinvest.de.
But real estate crowdfunding has been a hot market. The main idea behind crowdinvesting is to get a fairly large number of small investors involved in making contributions towards construction initiatives. This is done via bonds or subordinated loans. Hamburg-based Exporo has been a key player in these markets and has now expanded its position by merging with Zinsland.
But last year, the financing volumes at Exporo had dropped significantly. Exporo CEO Simon Brunke noted that “In the first few months of the crisis in particular, investors held back and we scaled down marketing,”
Bergfürst also reported falling below the previous financial year’s levels. The investment volumes in the ecosystem dropped by nearly 100 million to around 300 million euros during the past year (according to public investments tracked by the Crowdinvest platform).
Engel & Völkers reported that they managed to more than double their financing volume to approximately 50 million euros. After a challenging start with Kapilendo as a partner, the new independent portal is now performing well, according to Finance FWD.
The real estate firm has once again made a “very significant capital increase” for its digital or online subsidiary, according to CEO Marc Laubenheimer. However, he did not share the exact amount of investments.
Meanwhile, the Austrian platforms Rendity and Dargobertinvest also reported an increase in volume during 2020. These platforms usually fund relatively smaller real estate initiatives, but their rates tend to be higher.
But Exporo has maintained its dominance in the market. This year, the firm intends to surpass its numbers from 2019 by 10 to 20%, Brunke noted. Engel & Völkers said that it’s also anticipating steady growth.
During the last few months, several real estate initiatives have had to postpone their repayments schedule. At Exporo, for instance, there are 17 projects, as can be confirmed via the platform’s official website. Local sources have also revealed that there are certain problems experienced by Bergfürst (as the Handelsblatt reported).
The platform managers stated that the delays in the construction projects will be a part of the issues. These startups are now under pressure to demonstrate that they can deal with these challenging issues and prove they are capable of collecting money for their investors.
The market may also get a boost from updated regulations: the European crowdfunding license may potentially further simplify the process of making international investments (and may be introduced at some point later this year).
Laubenheimer from Engel & Völkers added they “expect a very high level of interest from European investors in investments in German real estate.”