The ABC’s of real estate crowdfunding and its perspectives in the complicated environment

After the increase in interest rates of the construction loans in Mexico, the platforms of collective funding —model known as crowdfunding— have positioned themselves as an alternative for the financing of real estate projects.

According to data from the Association of Collective Funding Platforms (Afico), in the last five years this industry has funded close to 8,500 million pesos, that is, a growth of 695% in said period.

in matters of real state developmentthese firms function as intermediaries between investors who wish to diversify their portfolio and developers seeking funds to carry out commercial, industrial or housing projects.

In Mexico, there are currently different crowdfunding platformsof which 14 have obtained their authorization to operate under the terms of the Law to Regulate Financial Technology Institutions, known as Ley Fintech.

In this context, four entities of crowdfuding real estate have been authorized under the terms of this law:

Also, there are other entities crowdfunding inmobiliario who already have a conditional authorization, that is, they only have to comply with certain administrative procedures in order to have the final guarantee. The platforms in this scenario are:

· Expansive.
· Briq.mx.
· Monific.
· PM2.mx.

These entities, although they are not yet 100% authorized by the Fintech Law, can carry out operations since they began work since before the promulgation of the regulations, which was in March 2018.

current scenario

The entities of crowdfunding inmobiliario They have had constant growth in recent years, both in terms of credit and funding, which they receive for the development of real estate projects.

In 2021 alone, the firm Briq.mx funded around 350 million pesos, with investments starting at 1,000 pesos and returns between 12 and 20% per year.

However, by the end of 2022, it is expected that the funding received from investors will slow down due to the increases in the reference rates of the Bank of Mexico (Banxico), according to Alberto Padilla, general director of Briq.mx. .

“We are going to grow, but not at the rate of previous years. The number of investors will probably increase, but not the amount of funding, mainly due to the rise in rates,” he commented.

According to the specialist, instruments such as the Federal Treasury Certificates (CETES) or the Bank Notes have become more attractive in the market, which reduces the participation of higher-risk investments, such as the crowdfuding real estate.

“Fortunately the real estate investment It is in the first step of risk, and this effect does not affect us as much as it does the Stock Market, crypto assets, among other instruments. However, there is a hit. Also this year has been critical for regulation,” he said.

yields

Despite the inflationary outlook, Padilla stressed that the real estate It is always a good investment opportunity and generates competitive returns.

One of the main characteristics of this model in general is that it allows participation with minimum investments of up to 5,000 pesos, in developments that offer returns of between 14 and 16% per year, depending on the type of property.

Marco Arroyo, director of real estate projects at M2Crowd, explained that in the process of investing in crowdfunding inmobiliariothe interested parties go through an accreditation filter in which they must present identification and a bank account to make the transfers.

“Once on the platform, each investor can choose the project that seems most attractive due to the area, the design and, above all, the return on investment,” said Arroyo.