By Tom de Lucy | Bricksave
February 14, 2023
We’re all aware that 2022 was an exceptionally difficult year both socially and economically, but it’s encouraging to observe that both the appetite for and ability to invest in overseas real estate amongst Bricksave investors continued to grow from strength to strength.
You funded 20% more properties than in 2021, making 30% more investments and committing around 60% more capital to real estate in both the US and Europe. Taking into consideration the global economic condition those are very satisfactory figures.
So why cautious optimism for the year ahead? High inflation remains a very real problem across the globe, with central banks trying to return to ‘normal’ levels by increasing interest rates, which of course has a knock-on effect on mortgage rates. As a consequence, we are seeing – and will continue to see for some time – a fall in the demand for mortgages which will affect different housing markets in different ways.
In our core market of the U.S. it is important to note that around 85% of mortgages outstanding are fixed-rate, with many of these taken out before base rates were increased. Rental demand will undoubtedly grow, but as many mortgagees will be unaffected by rate increases for some time, adjustments are most likely to occur in those local markets most sensitive to mortgage demand and those where cash investors choose to hedge against inflation. Our Real Estate team continually assesses thousands of data points across hundreds of markets and will continue to source the best opportunities available.
There are signs that the economic condition is improving. Wholesale energy prices are coming down, the price of petrol is approaching what it was before the Ukraine crisis and inflation in most major economies has at worst stabilized and is expected to fall in the second half of the year.
Whilst many are predicting this will turn property markets around by the end of the year, until then the slowdown in home sales is likely to continue. For as long as mortgage demand is suppressed cash is king and Bricksave’s steadily growing membership increases our purchasing power and liquidity, giving us a competitive advantage.
The Section 8 federal housing programme forms a significant element of Bricksave’s investment strategy. There is talk in the U.S. of reinvigorating the programme which will make rental demand for our core market of affordable properties almost certain to remain particularly high, with rates predicted to grow by as much as 6.3%.
We see current conditions as an opportunity to generate strong rental cash flows from relatively affordable properties. With significant potential for appreciation across the medium-term, our 4-year investment strategy is primed to perform strongly.
One other development at Bricksave that will be of interest to members is the forthcoming launch of the world’s first fully regulated, securitized real estate token. Tokenization is an innovative process in which our properties will effectively become digital stocks with irrefutable proof of ownership, tradeable on a secondary market.
Little will change in the way you interact and invest with Bricksave, but thanks to increased operational efficiency and faster and cheaper property transactions, investment yields will increase, entry levels will lower and there will be many more ways in which funds can be transferred into and out of your investments.
As always at this time of year I’d like to thank you for the continued trust you show in Bricksave and we look forward to helping make 2023 a most prosperous year for you.
Sofía Gancedo, the Argentinean who founded a real estate crowfunding platform and is going for a US$ 100 million megafund.
The system uses an algorithm of 3,000 data points, which looks for investment opportunities where there may be appreciation. "Each property has an estimated annual rental return of between 7% …