Real estate crowdfunding: beware, turbulent zone!

Bamboo’s move to real estate crowdfunding. This product, which has performed well in recent years, driven by very attractive yields between 8 and 12%, is going through the most serious crisis in its (young) history. This is evidenced by the very clear slowdown in collections that players in this market have seen overall. Between January and November 2023, the number of projects financed on platforms below the threshold of a thousand units fell to 903 operations, with an amount of approximately 860 million euros collected, according to the barometer on the HelloCrowdfunding site. That’s down 24% in volume and 28% in value compared to the same period last year! Even more worryingly, the platforms raised only around fifty million euros in November. This is three times less than the flows that passed through them twelve months ago. The drying up of streams is therefore gaining momentum. Gloomy times for developers It is not surprising that investors’ lack of confidence in real estate crowdfunding can be explained by the slump in new construction and the real estate crisis in general. Developers have not experienced such a degraded environment since the crisis of the 1990s. An increase in credit rates deprives buyers of their creditworthiness. Added to this factor is the inflation of construction costs caused by the new environmental standards (RE 2020) and the increase in material costs. This jaw effect weakens market players and threatens current programs. In short, for individuals, lending to a developer means embarking on a very daring operation in which the probability of losing all or part of the capital is no longer negligible.

Unfortunately, these investors are often unaware of the real risks associated with this investment.Judge Guillaume Fonteneau, Independent Asset Management Consultant. They mistakenly believe that diversifying lines is enough to protect against accidents. It may have been the case before the crisis, but with regard to the wave of failures expected in real estate development and among real estate traders, it is no longer true. “.

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