Real estate crowdfunding is fast becoming one of crowdfunding’s most successful applications. Like other aspects of the new shared economy (e.g. donation-based crowdfunding or ride-sharing), investing in real estate crowdfunding is one of the few iterations of the democratized economy that enables ordinary citizens to enter a previously exclusive part of the financial sector; at the same time, real estate crowdfunding often offers incentives for established professional/institutional investments.
This makes equity crowdfunding one of the most popular crowdfunding implementations to date, one that can be used for all forms of investors; while first-time investors use real estate crowdfunding to start saving for their pension, it can be used for experienced investors to protect against portfolio imbalances. For example, Santander is now working with a leading UK equity crowdfunding platform to provide cash for social projects.
But real estate crowdfunding is not only popular because it creates opportunities for new types of investors, it is also popular due to the ability it has to produce safe, stable returns. Crowdfunding for real estate helps investors to put money into properties at the world’s most lucrative sites, while at the same time benefiting from the opportunity to spread the investment over many properties.
To illustrate this, here are a few figures on the real estate crowdfunding sector:
- In 2014, the real estate crowdfunding industry expanded by 156 percent, estimated at about $1 billion at the time.
- Real estate crowdfunding rose to an estimated $3.5 billion in 2016, making it one of the fastest growing crowdfunding branches in the field.
- The real estate crowdfunding got to $5.5 billion by the end of 201.7
- The World Bank estimates that by 2025 the entire crowdfunding market will have a value of US$ 93 billion.
- Real estate crowdfunding campaigns range from $100,000 to over $25 million, making it open for all budget sizes and investment forms.