Think Globally: 4 International Real Estate Crowdfunding Trends for 2015
As the real estate market continues to change and evolve at lightning speed, it’s no wonder that new ways of investing are starting to replace the traditional methods. Thanks to real estate crowdfunding, investors now have unprecedented access to more international properties and markets than ever before and the need to “think globally” is a necessity to succeed. The widespread impact crowdfunding had on a global scale in 2014 caught many by surprise and it’s safe to say that the world is now becoming a global village as more countries get onboard with crowdfunding. But what’s on tap for 2015? Here are four trends I think we will see in the coming year.
Influx of new crowdfunding platforms
There are thousands of crowdfunding platforms available around the world with many specializing in real estate investing. In fact, a September report by industry analysts Crowdnetic showed that two of the three top sectors for “accredited investor” crowdfunding raises under Title II of the JOBS Act in the U.S. are real estate related, proving its popularity. When something gains as much attention as crowdfunding has, one can expect an influx of new portals to pop up in order to take advantage of the trend. Expect to see even more real estate crowdfunding platforms launch in 2015 with some dedicated to international markets. However, new investors to the world of crowdfunding still need to be selective and consider each platform’s due diligence process before they move forward. Despite an increase in the number of crowdfunding sites, the early adapters who had substantial real estate experience prior to the advent of crowdfunding will be the ones to stand out from the crowd, providing investors with the support and guidance needed to make the most of their global investments.
Emergence of niche platforms
With more crowdfunding platforms debuting in 2015, we can also expect to see a rise in niche real estate crowdfunding portals as certain sectors continue to gain popularity with investors. One sector projected to be the most popular for investors is the medical industry, to include hospitals and assisted living facilities. We are already seeing rising interest from Asian investors in this sector and this will continue in 2015. One reason for the increased interest in medical real estate properties is due to the “graying” of our population. As the population ages, the need for more medical facilities will spur development and new projects worldwide. Macro real estate sectors tend to be more resilient and a smarter investment for long term financial stability. Thus, crowdfunding companies will take advantage of this trend and offer investors real estate properties that focus on just one sector.
Foreign investment in the U.S. will continue
The massive movement of capital from people who are investing internationally will continue in 2015 as foreign investors look mainly to the U.S. for investment opportunities. In 2014, more than seven percent of all residential property investments in the U.S. was foreign investment, with China alone investing more than $15 billion. This number is expected to grow by 20 percent each year for the next decade. The reason so many foreign investors find U.S. properties appealing can be directly attributed to the economic turbulence and currency depreciation many of these countries are experiencing. Florida, Arizona, California and Texas will remain top real estate targets for foreign investors, who will look for rental properties or second homes to add to their portfolios. There will also be more interest in tier 2 cities with more value (like Atlanta), commercial properties and the healthcare/medical sector from Asian investors. Real estate crowdfunding will play a key role in helping to accelerate these trends as foreign investors gain more online access to global properties.
More control from SEC and other global entities
Real estate crowdfunding has experienced a tremendous amount of growth ever since the SEC amended Regulation D rules in 2013 to allow for general solicitation of accredited investors in the U.S. But as the SEC continues to finalize rules for non-accredited investors, the use of crowdfunding portals worldwide is resulting in more countries taking a more serious look at crowdfunding as it gains popularity. For example, India and Malaysia have started to solicit feedback from industry stakeholders about crowdfunding while Hong Kong’s Securities and Futures Commission (SFC) released information in May 2014 about potential regulatory issues and risks associated with crowdfunding. It’s apparent that other countries are starting to get on board with crowdfunding, but guidelines must be in place to ensure the integrity of these platforms remains intact.
It’s clear that 2015 is shaping up to be an exciting year for international real estate crowdfunding. From a global perspective, the industry is poised to grow and gain even more traction as savvy real estate investors worldwide use online platforms to conduct their transactions. With the help of crowdfunding platforms, efficiency and transparency in international real estate investing is attainable through technology and has truly opened the doors to global partnerships that are making a difference around the world.
About the Author
Scott Picken is the founder and CEO of Wealth Migrate, the premier online global real estate investment marketplace. He is an expert in global real estate markets with more than 16 years of experience in the industry. Wealth Migrate offers investors access to below-market real estate in first world markets through crowdfunding with a low investment minimum of just $10,000 USD. For more information, visit www.wealthmigrate.com.
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