How Crowdfunding is Revolutionizing Investment in the Real Estate Sector

How Crowdfunding is Revolutionizing Investment in the Real Estate Sector
Crowdfunding is a disruptive and decisive force to the real estate industry, and it’s ready to offer much more in the days to come

Arjun Dublish
CEO & Co-Founder, Prime Shares Estate

Business is all about innovative ideas and concepts: when hatched on feasible plans, they don’t only grow but flourish too. Nowadays, converting an idea into a business is no more a big deal because any breakthrough concept can become a big hit if one is smart in crowdfunding. Pebble Time that raised more than $20 million on Kickstarter is one of the easiest examples to manifest the power of crowdfunding. Sectors like IT, Health, and Entertainment are already the top beneficiaries of crowdfunding, but it is the Real Estate that is going to be the foremost choice of the investors in the future. This modern form of financing has become the reality of the realty sector to start and accomplish dream projects. Also, it is a highly transparent approach for investors to multiply their money through immensely lucrative investment opportunities in the real estate sector.

A Healthy Transformation

Earlier due to various legal and technical reasons, making investments in the real estate projects was almost impossible for small investors and people with no in-depth knowledge of the sector. The dawn of crowdfunding has corrected the previous shortcomings, minimized the gap between industry players and potential investors and created opportunities for mutual gains. Now, real estate is not restricted to millionaires and billionaires, with the help of crowdfunding, even the wage earners can register their entry into the world of real estate. Also, as crowdfunding is an out-and-out online process, people all around the globe can participate in it without any geographical barriers and can optimize their investments through a vast gamut of options in the realty sector.

According to the RBI, Indians have invested almost $112mn in the financial year (2015-16) in foreign properties through LRS (Liberated Remittances Scheme) which means buying apartments overseas is no more a big deal for Indian customers and investors. Crowdfunding has created a win-win scenario for both investors and realty businesses. On the one hand, it splurges ample opportunities for small as well as big investors to invest their money in high income generating real estate projects and on the other hand, it connects businesses with potential investors on favourable terms and conditions. In the light of the changing scenario, crowdfunding is an opportunity to disrupt this sector through organized platforms where investment and management of real estate properties would be more systematic apart from currency hedge that international investments are generally exposed to. That’s why it is the opinion of a majority of people that the marriage of real estate with crowdfunding is not just highly compatible but gainful too at both ends of the relationship and the chemistry between the two is expected to produce long-term profits in the future.

It’s All about Transparency

Easy communication and transparency are the prerequisites of every successful relationship in the business world. Clarity in communication and exchange of every minor and major information among the stakeholders helps build trust between fundraisers and investors. In crowdfunding projects, an investor knows all the essential details such as where the amount is invested, what the present status of the project, and when the project is expected to complete. In fact, before making a final decision, the investors can cross-check all the information pertaining to a project. Moreover, he/she can view online that how a particular holding/property is performing. In case of any discrepancy or delinquency, the aggrieved investor can raise the issue in the forum and may seek the help of other investors. So, risks associated with crowdfunding are very less in comparison to traditional methods of investing.

The Disruptive Driver

Be it a Fortune-500 company or a startup firm; crowdfunding is very much imperative for real estate businesses in the present era of communication and competition. It has bestowed the industry with a platform that is global, transparent, flexible, fast, and profitable to both industry players and investors. It has infused a fresh life into the realty world and opened new vistas of opportunities for everyone. All in all, crowdfunding is a disruptive and decisive force to the industry, and it’s ready to offer much more in the days to come.