As the Real Estate Crowdfunding industry matures, its landscape will begin to change to suit the space in the market that it fills. Real Estate Crowdfunding has grown from a 19 million US Dollar sector in 2012 to an estimated 3.5 billion in 2016, demonstrating its rapid rise to prominence in the investment market.
As practices in the industry develop and companies respond and adapt to change, some interesting trends are likely to emerge, many of which are already beginning to surface:
With any new product or service, there is always a wave of new companies being set up to provide it – Real Estate Crowdfunding is no different. But over the next few years a lot of those early companies may not survive, probably due to lack of conservatism regarding projections for success, or possibly because they won’t be able to keep up with a changing market. Whatever the reason, there will likely be less Real Estate Crowdfunding platforms, and this will lead to companies offering more targeted or specialized crowdfunding services in order to stand out from the crowd (an early example would be a platform that focuses solely on a particular type of commercial property). This is a good thing: it can provide a wider range of opportunities for investors with specific goals or needs.
In an article on Real Estate Crowdfunding’s future, Forbes recently pointed out that millennials no longer want to own solid things outright as much as the previous generation (cars, houses etc.), but what they do want is a safe place to put their money, especially with a new generation of younger people making money in tech. Their love of on-demand services and quick online processes means that Real Estate Crowdfunding is a perfect fit for them, so the industry may well see the average investor age range lower over the coming years. This will help bring a wider demographic into the property investment sphere, and thus provide more funds for development and industry innovation.
Cross-continent investment is increasingly becoming the lifeblood of economies across the globe – Chinese investment in US real estate, for instance, is predicted to double over the next five years, potentially reaching the 200 billion dollar mark. What Real Estate Crowdfunding can contribute to this is the increase in international investment by non-professional investors, i.e. normal people investing in property abroad. This gives more investors the chance to benefit from lucrative foreign investments, the likes of which may not exist in their country. Seeing as real estate investment is traditionally seen as a local endeavour, this shift is set to fundamentally revolutionize property investment as we know it, with Real Estate Crowdfunding spearheading the change.
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