Real estate crowdfunding recorded record fundraising last year. But in recent months, the sector seems to be losing momentum. And investors are worried about the future.
For 10 years, real estate crowdfunding has broken all records. And the 2022 vintage was no exception. In total, the platforms in the sector have collected more than 1.6 billion euros last year. Either 40.2% more than in 2021, according to the Participatory Financing France (FPF) barometer.
It must be said that on paper, real estate crowdfunding has it all. Yields are excellent: 9.4% on average over the year 2022. And that’s not all. Investments are accessible from a few tens of euros. Not to mention that your funds are immobilized for a short period. Between 12 and 24 months, most often.
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Serial delays
But the wheel turns. Until now, real estate projects were financed in less than 15 hours. But for the past few months, the sector has been idling. Collection still in progress 4 days after the opening… Unheard of on this platform!, observes for example top_kek on the MoneyVox forum.
We feel that the platforms are having a little trouble completing operations at the moment given the follow-up emails that are falling, continues Msimmo, another regular contributor. But why are investors less inclined to bet on crowdfunding platform projects?
At this moment, the payment delays on the platforms are multiplying, answers Karl Toussaint du Wast, co-founder of the Netinvestment platform. On Wiseed, 10.5% projects would be concerned, according to a letter sent by the platform to investors. This is significantly more than 12 months ago. And Wiseed is not an isolated case. In reality, the whole sector is affected.
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The nine in difficulty
Because in an attempt to curb inflation, the European Central Bank (ECB) raised its rates for the seventh time since July 2022. Unheard of. However, these increases have repercussions on the other rates. So much so that mortgage rates now exceed the bar of 3%whatever the duration of the loan, according to the latest barometer of the broker Meilleurtaux.
Result? Today, nearly 50% of loan requests are refused, which limits the number of buyers, says Karl Toussaint du Wast. We have never had such a bad year, abounds Pascal Boulanger, president of the Federation of property developers in France (FPI). Over one year, sales of new homes fell by 26%.
And it is precisely because developers are struggling to sell housing that delays are increasing on crowdfunding platforms. this is added to skyrocketing construction costs. The price of certain materials, such as ready-mixed concrete, for example, increased by 17.2% over the first two months of the year.
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Default risk
So should we wait for better days to invest in real estate crowdfunding? Not necessarily. Because delay does not mean default. As long as the promoter does not go bankrupt, he is under a legal obligation to repay his debts, recalls Karl Toussaint du Wast. And meanwhile, interests continue to run. Your money is certainly tied up longer, but you are remunerated in return.
However caution remains in order. Because for the moment the failures remain rare. On Wiseed, for example, the default rate is lower 0.3%. That said, it is not impossible that this figure will increase in the coming months, indicates the platform. And for good reason: according to the Banque de France, the failures of construction companies jumped from 45.4% over 1 year in the 1st quarter of 2023.
If you want to limit the risks, invest only a small part of your savings and favor projects that have already obtained their financial guarantee of completion (GFA), says Karl Toussaint du Wast. To obtain this guarantee, promoters must have already sold more than 50% of their program. This limits (in theory) the risk of late or non-payment.
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