Going, Going, Gone – Crowdfunded Real Estate Taps into Australia’s Love Affair with Property
Australians have a love affair with property. According to CoreLogic data, Australian house prices have already increased by 6.3 percent this year. On its own, this number is relatively impressive, however it’s the post GFC growth data that tells a rather more sobering or encouraging story – depending on which side of the home ownership fence you sit. Since January 2009 to today, the cumulative change in dwelling values for all major Australian capitals have risen by a combined 56.1 percent. In Sydney, that number now stands at 90.2 percent.
Home ownership – what was once a rite of passage for young adults – is now shaping up as a stand-off between asset rich baby-boomers and millennials. It should therefore come as no surprise that one reaction to this has been a wave of real estate fintech startups emerging across the world. And while some don’t necessarily solve the problem directly, they certainly have one thing in common – they allow the everyday investor to gain exposure to commercial or residential property assets from as little as $100.
Investment in real estate crowd funding was estimated to have reached $2.5 billion in 2015. In the US, it’s thought there are over 100 crowdfunding-esque platforms targeting retail investors, hoping to give them a slice of the property pie. For an incredibly comprehensive breakdown, go no further than Ian Ippolito’s The Real Estate Crowdfunding Review.
Down under, here are some worth taking note of:
This site seems to follow the basic premise of real estate crowdfunding. Sign up, pick a property and invest from as little as $100. Unfortunately there weren’t any active projects for me to invest in when I signed up, however the site looks to have successfully funded a number previously.
Setting the minimum investment bar a little higher at $2000, Estate Baron actually lets investors participate in the due diligence process before a project becomes live for active investment, allowing them to review details of the upcoming project and post a question. Again, there were no live projects on the platform for me to invest in, but it was fun to browse through the upcoming ones. Estate Baron also seem to offer a whitelabel version of their platform – SaaS real estate crowd funding anyone?
Founded in 2011, DomaCom was one of the first crowd funding platforms in Australia. The company is currently seeking an ASX listing, looking to raise $10 million in funding at an offer price of $0.75 per share. In late July DomaCom announced a fintech tie-up with p2p lender ThinCats to offer the startup’s 350 lenders the option to invest in its listed properties.
Coassets is South East Asia’s first real estate crowdfunding platform. In the past two years they’ve facilitated over $43 million in property investment transactions and have offices across Singapore, Australia, Malaysia, China and Indonesia. They are also seeking an ASX listing and their exposure to APAC investments could be the differentiator for investors as market competition heats up.
The global rush of money into housing assets over the past 7 years has added to fears of an increasingly financialised economy, driving money away from productive enterprise and main street, where many argue the real job creation and wage growth occurs for those outside the 1 percent. Real estate crowd funding could be seen as an enabler through this prism, further inflating what some are considering a property asset bubble. However for many retail investors it will be seen for what it is – an ability to gain exposure to the property sector they otherwise would not have been able to. For future homeowners, the slight irony is that many will see this type of investment as merely a means to an end – that being a roof over their own head. The question is whether these platforms can deliver the returns they need to make this happen.
Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business. 
