Where and how crowdfunding is growing in the real estate sector

Real estate crowdfunding shows no signs of waning, neither in Italy nor in the world. According to the latest report produced by PoliMi's School of Management with the company Walliance - which will be presented on Thursday - by the end of 2024 the market should confirm the 2023 funding volumes in the USA and the rest of the World; in the European Union the estimate is 2.5 billion, reaching a cumulative 14.9 billion. In Italy the target is a collection of 750 million, a slight increase on 2023.

Real estate crowdfunding (Recf) is a form of 'alternative' investment that allows one to participate in the financing of a real estate project on an Internet platform. On the one hand, it makes it possible to deploy sums, even small ones, in a type of asset that normally requires a much more substantial commitment of fixed capital, facilitating portfolio diversification, against a risk. On the other, it allows operators to broaden their sources of financing without any particular guarantees to offer. According to the research, at the end of 2023 Recf worldwide boasted cumulative inflows of EUR 52.7 billion, compared to EUR 45.2 billion in 2022. The number of active platforms surveyed rose to 159, including 81 in the European Union, 23 in the United States and 55 in the rest of the world. The projects fall into two types. The first is equity crowdfunding where investors finance real estate projects by acquiring shares in the property and becoming owners of the right to receive any profits generated by periodic returns (rents) and/or capital gains from the sale of the property (this return depends only on the success of the project). The second is lending crowdfunding where investors lend capital to fundraisers by subscribing to a debt security (such as a bond) or a direct loan, against payment of an interest rate and the return of the capital on maturity.

At EU level, the sector has raised around EUR 12.4 billion, of which EUR 2.6 billion in 2023 alone. The most important markets are France, the reference point with over 1.3 billion raised (leading French platform Club Funding), Germany (with 538 million) and Italy, which rises to third place with 180 million. 84% of funding is for residential projects. The percentage of projects with repayment delays of less than six months is increasing, but that with delays of more than six months or in default is falling (from 12% to 9.3%).

In Italy, there are 16 platforms authorised on the basis of the new Ecsp Regulation compared to 27 in 2022, a reduction linked to market concentration. Cumulative funding at the end of 2023 was 544.5 million with 1,314 closed campaigns (189.9 million from equity and 354.6 million from debt). In 2023, 408 campaigns were registered (27 from equity and 381 from lending) with a funding flow of EUR 185.5m (+17% on 2022). The market share of renovations (90%) consolidated, with 58% of projects in urban contexts. Centre of gravity in Lombardy, followed by Latium, Piedmont and Tuscany.