Property crowdfunding is becoming an increasingly viable option for Australians wanting to break into the market.
This is according to a new study conducted by the University of South Australia in conjunction with Domacom, one of the largest property crowdfunding platforms in Australia.
The aim of this project was to analyse crowdfunding trends in the real estate market and their findings were rather interesting.
A growing concept
While crowdfunding itself is not a new concept, the notion behind real estate crowdfunding is still in its teething phase, especially in Australia where the topic has not been extensively researched.
However this is starting to change, said researchers who conducted investigations into the perceptions of property crowdfunding as a method of property investment amongst Australians.
“Based on international trends, crowdfunding is a rapidly growing field of investment, and this is also true within the property crowdfunding environment,” researchers said in the study, although they pointed out that “Australia is still in its infancy as far as regulation and legislation, as well as academic and other sources of information, around property crowdfunding.”
Crowdfunding trends in Australia
Based on research, the study found an average amount of AUD $14,263 was invested into property crowdfunding platforms, with up to 75 percent of investors shelling approximately AUD $10,000 or less in property crowdfunding.
Investors tend to be most interested in rural property (77.4 percent), followed by commercial property (27.4 percent) and then residential property (25.8 percent) and viewed real estate crowdfunding as a low to medium risk investment.
Interestingly, it was established that, although most respondents participating in the study said they had a basic idea of property crowdfunding, none of them claimed to be experts in the field.
The tipping point
Commenting on these trends, Property Crowd Funding in Australia (PCFA) said property crowdfunding could become a feasible option.
“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,” the governing body for crowdfunding in Australia stated.
Various local crowdfunding platforms have been established over the years and, although PCFA believes the support for crowd funded property “is not there yet”, it is on the rise.
“Based on offshore experience we should expect something big,” the organization noted.
“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.”