PROPERTY CROWD FUNDING IN AUSTRALIA |
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We are at tipping point internationally where crowd funding has matured and should be considered as an alternate funding choice and not something new, property is just one example of how projects and businesses are using the internet to engage with customers and backers to deliver innovative outcomes.
Proportionate property has roots right back to the 70’s where publicly traded REIT’s were developed. In the 80’s institutional money was increasingly directed towards property transactions, through the 80’s and 90’s REIT’s grew and commercial mortgage backed securities were created, into 2000 and GFC we had unsustainable financial products and that opened up demand for crowd funding on platforms such as Kickstarter, Pozible and Chuffed.
Locally a number platforms have setup to take advantage of the opportunity. Sites like CrowdfundUP, Domacom, Estatebaron, Bickx, CoAssets and a half a dozen more are in various stages of start-up and or early stage operation. These sites are offering something new, however most are utilising a pre-existing structure like contributory mortgages with ASIC relief or a full retail AFSL. It’s a lot of overhead, however the policy support for crowd funding property isn’t there yet. It’s possible that some will use the equity crowd funding rules set for conclusion in spring parliament, however there are still moving parts to be fixed.CF Property Platforms offer key points of difference such as early entry into the market by investment of a little as $2,000, with quick exit via a secondary market at a low cost, rather than waiting 3 months to sell you house. Its great, you can invest directly into the asset and buy-pass the middlemen. They say crowd funding property could offer new options not previously available to those who are not eligible as ‘exempt investors’ whist providing low risk due to the absence of gearing.
Crowd funded property is on its way, and based on offshore experience we should we expect something big. Chinese property giant Dalian Wanda group closed a campaign in June for over a Billion Australian dollars, the North American market is on the same scale. We don't know at what scale it’s going to happen here, however the bigger question is how to best facilitate it so that everyday Australians have better access to property and the high levels of transparency evident in other forms of crowd funding.
Proportionate property has roots right back to the 70’s where publicly traded REIT’s were developed. In the 80’s institutional money was increasingly directed towards property transactions, through the 80’s and 90’s REIT’s grew and commercial mortgage backed securities were created, into 2000 and GFC we had unsustainable financial products and that opened up demand for crowd funding on platforms such as Kickstarter, Pozible and Chuffed.
Locally a number platforms have setup to take advantage of the opportunity. Sites like CrowdfundUP, Domacom, Estatebaron, Bickx, CoAssets and a half a dozen more are in various stages of start-up and or early stage operation. These sites are offering something new, however most are utilising a pre-existing structure like contributory mortgages with ASIC relief or a full retail AFSL. It’s a lot of overhead, however the policy support for crowd funding property isn’t there yet. It’s possible that some will use the equity crowd funding rules set for conclusion in spring parliament, however there are still moving parts to be fixed.CF Property Platforms offer key points of difference such as early entry into the market by investment of a little as $2,000, with quick exit via a secondary market at a low cost, rather than waiting 3 months to sell you house. Its great, you can invest directly into the asset and buy-pass the middlemen. They say crowd funding property could offer new options not previously available to those who are not eligible as ‘exempt investors’ whist providing low risk due to the absence of gearing.
Crowd funded property is on its way, and based on offshore experience we should we expect something big. Chinese property giant Dalian Wanda group closed a campaign in June for over a Billion Australian dollars, the North American market is on the same scale. We don't know at what scale it’s going to happen here, however the bigger question is how to best facilitate it so that everyday Australians have better access to property and the high levels of transparency evident in other forms of crowd funding.
2017