Finance Monthly September 2021 Edition

57 www.finance-monthly.com INVESTMENT - REAL ESTATE CROWDFUNDING become commonplace. The new standards and the ability for crowdfunding agents to work seamlessly with developers all across the European continent ensure a fertile ground for the industry. Interest Rates and Returns A growing number of real estate platforms ultimately stimulate a higher output for aggregation platforms such as BrikkApp. For investors, it brings higher diversification between investment opportunities. From the current point of view, the size of the platform is becoming less important. Still, the quality of the project (e.g., well-funded, location, housing prices) investors can crowdfund attracts enormous interest. If the quality of investments and returns will be the decisive factor for the crowdfunding community, this allows a fairer investment fund distribution across European real estate. One of the downsides of the EU regulations could be a potential split between regulated and unregulated platforms. The latter could try to offer higher returns that don’t face restrictions by any legislation. Fortunately, this won’t stop regulated platforms from offering healthy returns, and it will establish them as more trustworthy than unregulated businesses in the long run. Lastly, due to the global pandemic, interest rates have been lowered worldwide to stimulate consumption. As a result, banks fear the trend going towards negative interest rates. “Facing the likelihood of negative interest rates, investors prefer P2P real estate lending platforms as a potential option for their funds. This happens because they could earn significantly higher returns,” agrees Narinder Khattoare. He is the CEO of Kuflink Group, a company developing and leveraging P2P investment models. Higher returns will positively impact the industry and create an enormous leverage effect for those who invest now. “In our case, we are currently able to offer returns up to 16% because we are working on developing markets, with a big potential for capital growth. By developing most projects by ourselves, we are lowering the expenses as much as possible”, says Tanel Orro. Tanel is the CEO of Reinvest24, a real estate investment platform based in Estonia. The new EU regulations will not be smooth sailing for every platform. For example, Max Crowdfund operates using blockchain technology, and banks and payment providers are still reluctant to work with the technology. Currently, Max Crowdfund can offer debt-based real-estate-backed loans to their investors. “Oncewe have obtained the license per the new European regulation for crowdfunding platforms (CSPR), we will add equity-based deals and a secondary market,” reveals Mark Lloyd, CEO of Max Crowdfund. The European crowdfunding real estate market shows promising progress. Particularly the Baltics and countries in Eastern Europe, including Estonia, Moldova, and Latvia, are attracting investors’ interests. “We see great potential in the real estate sector, as the competition is still low, due to the small size of the market,” concludes Tanel Orro from Reinvest24. As soon as crowdlending platforms start to diversify their portfolio and collaborate with each other and developers alike, the alternative property market is ready to become a mainstream capital source. The European crowdfunding real estate market shows promising progress. Particularly the Baltics and countries in Eastern Europe, including Estonia, Moldova, and Latvia, are attracting investors’ interests.