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Real Estate Crowdfunding Market Segmentation by Investors (Individual, and Institutional); by Model (Lending, and Equity); by Real Estate Sector (Residential, and Commercial) – Global Demand Analysis & Opportunity Outlook 2019-2028

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Extensive insights into the Growth of Real Estate Crowdfunding Market amidst COVID-19

Before we witness the stabilization of economic growth in Europe and North America, Asia Pacific is estimated to bounce back progressively with countries such as China, India, South Korea and Japan witnessing more opportunities to recover from the losses sustained during COVID-19.

Being the biggest market in Eastern Europe, Russia is estimated to take the lowest hit, offering a sigh of relief to the businesses operating in the country. Whereas, GCC is estimated to observe low investments due to the sliding prices of crude oil.

We evaluate the strategies and commitment of the Giant Players in the market towards creating products and services that customers value and rely on.

In an attempt to control and eliminate the surge of coronavirus cases and meet the demand for required medical devices along with providing efficient medical services, there is a drastic shift of investments from authoritative bodies towards the healthcare sector. Where the aftermath of this pandemic may take years to be measured, Research Nester estimates notable expansion of e-health, gaming, and media and entertainment industries till the whole situation is contained and the plan of action for the recovery process is determined. There is an estimated probability of the growth in businesses going back a year if the condition is controlled in the next 2-3 months.                                                         Request Insights

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Global Real Estate Crowdfunding Market Highlights 2019-2028

The global real estate crowdfunding market registered a value of USD 120,740.9 million in the year 2019 and is further expected to gain a soaring revenue of USD 851,308.6 million by the end of 2028, by growing at a CAGR of 33.4% during the forecast period, i.e., 2020-2028. Growing industrialization across the world, which is propelling commercial real estate activities, coupled with the favorable regulations for real estate crowdfunding by the government of several economies globally, are some of the key factors anticipated to drive the market growth throughout the forecast period. Additionally, rising trends for the adoption of bitcoin cryptocurrency by the real estate crowdfunding platforms are also anticipated to drive market growth in the coming years.

Global Real Estate Crowdfunding Market Overview

Crowdfunding is a new and revolutionary way for business owners to raise money for their business, not by asking one investor for a huge investment, but by reaching out to a large pool of small investors who contribute a small amount of money in real estate projects. Before the jumpstart our business startups (JOBS) act of 2012, investing in real estate was conducted only by investing in physical properties or investing in real estate investment trusts (REITs). With the growing awareness for crowdfunding platforms amongst the investors, they can now buy a portion of the real-assets instead of buying the whole property. Moreover, backed by the growing digitalization, along with the proliferation of advanced technologies in the real estate industry, real estate firms have shifted their preferences from the traditional way of raising large-scale investments by increasingly preferring digital funding procurement methods and other real estate crowdfunding tools that focuses on crowdsourcing for funding the commercial real estate projects. Consecutively, the increasing adoption of blockchain for private funding in commercial real estate activities is further projected to have a significant influence on the growth of the global real estate crowdfunding market during the forecast period. The market is further forecasted to cross USD 113,000 million by the end of 2021.

Growth Highlights based on Region during 2019-2028

The global real estate crowdfunding market is segmented by regions into North America, Latin America, Europe, Asia Pacific, and the Middle East & Africa. Among the market in these regions, the market in the Asia Pacific is projected to hold the largest market share of 53.20% by the end of 2021. The growth of the market in the region can be attributed primarily to the growing number of commercial real estate activities in the region, backed by the increasing industrialization, and therefore the need for funding of different real-estate projects. Additionally, the growing popularity of lending-based platforms, along with the favorable initiatives of the government for crowdfunding regulations, are some of the additional factors anticipated to drive the market growth during the forecast period. CLICK TO DOWNLOAD SAMPLE REPORT

Global-Real-Estate-Crowdfunding-Market

On the other hand, the market in North America is primarily driven by nations such as the United States and Canada, where the market in the U.S. held the largest share in the year 2019. The real estate crowdfunding market in Canada is projected to witness significant growth in the coming years on account of the increasing development of commercial real estate properties, along with the rising awareness amongst individuals from crowdfunding platforms.

The real estate crowdfunding market in Europe is primarily driven by nations such as the United Kingdom, Germany, France, Italy, and Spain among others. Among the market in these regions, the real estate crowdfunding market in the U.K. registered the highest share of 41.5% in the year 2019 and is primarily driven by the increasing investments in real estate debts, along with the growing interests amongst non-institutional investors for investing through crowdfunding platforms in the real estate sector, backed by the high returns expected from the sector, and the supportive regulatory environment in the region.

The study further incorporates Y-O-Y Growth, demand & supply and forecast future opportunity in North America (United States, Canada), Latin America (Brazil, Mexico, Argentina, Rest of LATAM), Europe (U.K., Germany, France, Italy, Spain, Hungary, BENELUX [Belgium, Netherlands, Luxembourg], NORDIC [Norway, Denmark, Sweden, Finland], Poland, Russia, Rest of Europe), Asia-Pacific (China, India, Japan, South Korea, Malaysia, Indonesia, Taiwan, Hong Kong, Australia, New Zealand, Rest of Asia-Pacific), Middle East and Africa (Israel, GCC [Saudi Arabia, UAE, Bahrain, Kuwait, Qatar, Oman], North Africa, South Africa, Rest of Middle East and Africa).

Market Segmentation Synopsis

By Investors

The global real estate crowdfunding market is segmented by investors into institutional investors and individual or retail investors. Among these segments, the institutional investors segment is projected to hold the highest market share by the end of 2028. One of the recent trends in the real estate crowdfunding industry is the investments made by institutional investors, which include life insurance companies and pension funds. Institutional investors usually invest more than USD 10 million at a time which significantly helps crowdfunding platforms to raise millions of dollars at once.

The market is further segmented by crowdfunding model into lending and equity crowdfunding, out of which, the lending crowdfunding segment registered the largest market share in the year 2019. A lending-based crowdfunding platform is an alternative funding channel that permits household businesses and small businesses to be sponsored directly by a mass of investors. In lending crowdfunding, investment directly lends to the owner of the real estate assets. As a result, the individual does not receive any shares but receives a fixed return on the project's interest rate as per their investments.

The market is also segmented by real estate sector into residential and commercial sectors. Among these segments, the residential sector is projected to grab the largest market share by the end of 2021. The residential sector emphasizes the buying and selling of assets and properties used for homes or non-professional purposes. The residential real estate sector includes apartments, single-family homes, condominiums, planned unit developments, and others.

Market Drivers and Challenges

Growth Indicators

Massive Construction Activities Witnessed in Both Commercial and Residential Sectors to Expand the Growth of the Market

In recent years, the real estate sector has observed a significant growth in the number of commercial real estate activities, including the development of commercial structures, buildings, and others, such as hospitals, clinics, apartment buildings, duplexes, schools, and others. With such developments, there is a raising need for allocating funds for promoting these events, which is anticipated to promote the growth of crowdfunding platforms in the coming years. In addition, construction loans via crowdfunding platforms are emerging as a new source of funding for major construction sectors, including residential and commercial sectors, owing to which, investors do not need to buy the entire property. Instead, they can earn a portion of profits generated from the real estate investment, which can easily be used in construction activities.

Growing Implementation of Blockchain Technology in Crowdfunding Platforms to Drive Market Growth

Blockchain technology has made real estate transactions more straightforward and faster than ever. It is used increasingly for developing smart contracts and tokenization. Blockchain-based real estate crowdfunding encompasses a regulated, decentralized listing, property financing, and managing platform. It reorganizes rental agreements, assets, property task management, purchase/sale agreements, and related services on the blockchain. Blockchain technology facilitates peer-to-peer financing for real estate projects and reorganizes real estate necessities by permitting investors and proprietors to share funds and data efficiently and securely. The technology helps to eliminate intermediaries, reduces deception & frauds, and makes information more manageable. Further, blockchain real estate crowdfunding platform fast-tracks risk evaluation and investment proceedings. Such factors are anticipated to drive the growth of the global real estate crowdfunding market in the coming years.

Barriers

Low Liquidity of Investments, along with Regulatory Restraints and Risks Involved in Crowdfunding are anticipated to hamper the Market Growth

As securities purchased on equity crowdfunding platforms are highly illiquid, thus, exit options are significantly less or may not even really exist, just as the case for traditional venture capital investors. Crowdfunding investors may have to wait several years longer for their investment to pay off as the company take years to realize its potential. Additionally, growing instances of crowdfunding frauds reported in several nations worldwide, along with the high risks involved in these investments are some of the factors anticipated to hamper the market growth.

Impact of COVID-19 on the Global Real Estate Crowdfunding Market

Unlike other business sectors, the real estate sector has also been largely impacted by the coronavirus pandemic. The crisis has shifted the focus of the investors to invest more in essential goods and less in non-essential goods. Although, as investments in the real estate crowdfunding platforms start with a minimum of around USD 100, hence the flow of investments was not majorly impacted, therefore resulting in a steady growth of the market. The investments for real estate properties were further aided by the shift in preferences for online operations of businesses as social distancing had made it almost unmanageable for real estate professionals to show real estate properties physically. However, the pandemic has led to a substantial decrease in the transaction volume of the crowdfunding platforms, which resulted in lowering the operational cost of businesses by reducing the employees working in the sector and further adopting strategies that can help them run their businesses.

Competitive Landscape

Some of the prominent players in the global real estate crowdfunding market are CrowdStreet, Inc., RM Technologies LLC, RealCrowd, Inc., Groundbreaker Technologies, Inc., Groundfloor Finance Inc., DiversyFund, Inc., EstateGuru OÜ, AHP Servicing LLC, Crowdestate AS, and Fundrise, LLC.

FREQUENTLY ASKED QUESTIONS

Global Real Estate Crowdfunding Market

  1. Introduction
    1. Market Definition
    2. Market Segmentation
    3. Product Overview
  2. Research Methodology
    1. Research Process
      1. Primary Research
      2. Secondary Research
      3. Market Size Estimation
  3. Executive Summary-Global Real Estate Crowdfunding Market
  4. COVID-19 Impact on Global Real Estate Crowdfunding Market
  5. Policies and Regulations Landscape
  6. Analysis of Fundraising Model in Real Estate Crowdfunding Market
    1. Fixed Model  
    2. Flexible Model
  7. Market Dynamics  
    1. Drivers  
    2. Restraints
    3. Opportunities
    4. Trends
  8. Assessment of Use Cases of Real Estate Crowdfunding Market
  9. Analysis of Operating Costs Incurred in Real Estate Crowdfunding Market
    1. Platform Fees
    2. Equity (Additional) Fees
    3. Marketing Costs
    4. Project Specific Costs
    5. Realization Costs
  10. Assessment of Tax Implications in Real Estate Crowdfunding
    1. Income tax
    2. Capital Gains Tax
    3. Depreciation Recapture
    4. State Taxes
  11. Focus on Investor Perspective
  12. Analysis on Volume of Crowdfunding: P2P Lending and Equity Crowdfunding
  13. Number of Crowdfunding Platforms
  14. Global Perspective on Crowdfunding Platform
  15. Analysis on Institutional Investors
  16. Impact of Blockchain Technology in Real Estate Crowdfunding Market
  17. Overview on Bitcoin Crowdfunding
  18. Blockchain in Real Estate Crowdfunding- Use Case Analysis
  19. Elaborate Analysis on Third Party Verifiers and Other Service Providers - Opportunities in the Ventures
  20. Competitive Landscape  
  21. Global Real Estate Crowdfunding Market Industry Outlook (2019-2028)
    1. By Investors
      1. Individual Investors, 2019-2028F (USD Million)
      2. Institutional Investors, 2019-2028F (USD Million)
    2. By Crowdfunding Model
      1. Lending Crowdfunding, 2019-2028F (USD Million)   
      2. Equity Crowdfunding, 2019-2028F (USD Million)
    3. By Real Estate Sector
      1. Residential 2019-2028F (USD Million)
      2. Commercial, 2019-2028F (USD Million)
  22. Regional Real Estate Crowdfunding Market Industry Outlook
    1. North America (US, Canada)
    2. Latin America (Brazil, Mexico, Argentina, Rest of Latin America)
    3. Europe (Germany, UK, France, Italy, Spain, Russia, Rest of Europe)
    4. Asia-Pacific (China, India, Japan, Australia, Rest of Asia Pacific)
    5. Middle East and Africa (Israel, GCC, South Africa, Rest of Middle East and Africa)

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