The appeal of a high yield of close to 10% has allowed real estate crowdfunding to find a new dimension in 2021, certainly by capturing a small part of the savings surplus accumulated by households. The annual collection of real estate crowdfunding is approaching one billion euros, up at least 80% compared to 2020. The HelloCrowdfunding site has thus recorded more than 1,000 projects financed in 2021 for a total amount of over 950 million. euros compared to just over 500 million euros in 2020.
This strong growth obviously confirms the continued democratization of this unsecured investment, which is very attractive given the relatively limited risk taking. Real estate crowdfunding is also adopted by a growing number of real estate professionals to supplement their bank financing or their equity needs. For two years, the collection of transactions from goods dealers (purchase of goods which are then renovated or upgraded and then resold with a capital gain) has notably seen its share increase rapidly. In parallel, the construction of new residential programs has regained its colors since mid-2021 after a phase of delay in building permit authorizations.
9.2% return and 2021
HelloCrowdfunding calculates an average gross return of 9.2% for projects financed in 2021, a level that has been almost stable for two years (9.3% in 2020 and 9.2% in 2019). With such profitability which is around 6.5% net after application of the single lump sum of 30%, we understand better why individuals are turning more and more to this investment. For example, we remain twice above the performance of SCPIs, with the added bonus of more advantageous taxation. There are hardly any more risky and volatile investments like the stock market to hope to do better.
A delay rate greater than 10%
Be careful though, more than 10% of current projects experience repayment delays. HelloCrowdfunding currently identifies 165 delays out of 1,572 projects in progress. A project is considered to be late when the maximum contractual reimbursement deadline is exceeded. This rate therefore does not take into account minor delays which are frequent (weather conditions, works longer than expected, administrative contingencies, etc.) and comply with the regulatory extension period of 6 months.
For most of these projects that are a few months late, there is nothing alarming and savers continue to collect their interest during this extension phase. However, we can be concerned about a very small part of the projects that have been overdue for several years. About twenty projects are currently cumulative delays of 3 years or more, often with legal proceedings initiated. We must therefore expect that some of them, if not most, default with partial or total losses for investors. Reduced to a total of around 3,000 projects financed since the beginnings of real estate crowdfunding, the default rate would remain below 1%.
to know
Real estate crowdfunding consists of lending funds over a short period (a little less than 2 years on average) to professionals (most often an equity contribution in addition to a bank loan) via a platform specialized. The entrance ticket is very accessible, from € 1,000 or even less depending on the platform. Interest is collected at maturity, at the same time as the repayment of the capital.
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