The health crisis and real estate crowdfunding: what impact?

Real estate crowdfunding has been growing in popularity for a few years. However, the coronavirus crisis, bringing with it many fears, has raised uncertainty about the participatory financing. However, the situation is quite different: everything is going well for the sector, as indicated by the HelloCrowdfunding barometer barometer for H1 2020, which shows record levels of collections and repayments. There are several reasons for this.

The low technical breakage

The majority of the operations financed are property dealers' operations, in other words, purchase-resale operations that only require refurbishment or light work. The complete halt in construction work did not therefore affect these clients of real estate crowdfunding platforms.

Also, the promotions financed by these platforms are advanced to the point of having completed the shell.

There are delays in the industry today, largely due to this slowdown. However, interest still accrues over the extension period (which increases the absolute value of the return on investment) and is sometimes revalued upwards as a penalty over that period (which increases the final return).

Reassuring marketing

Attractive bank loan rates attract individuals to purchase real estate, allowing real estate developers to market their programs and thus reimburse investors

There is a direct correlation between the health crisis and real estate sales: the French find in these investments a safe haven allowing them to secure their assets for themselves and their descendants.

Real estate crowdfunding in a few figures

• 230 million euros funded in France from January to September 2020 (an increase of 22% vs. the same period in 2019). The symbolic milestone of one billion euros raised was also crossed very recently.
• 76.6 million repaid in the first half of the year (compared with €42m in the first half of 2019).
• Still no default recorded on operations financed on Raizers