Real Estate Investments: tech or club?
2020 will be remembered for a lot of unpleasant things, but for a number of real estate investors it was the beginning of a new adventure.
Milan and its historical buildings have, for a long time, been attractive for international investors. Not even the covid-19 pandemic was able to stop them.
This was possible even through technology and new investment instruments such as crowdfunding and club deals.
Crowdfunding, originally created to fund social projects through donations or loans from large pools of individuals – via internet platforms – was born in 2012 in the US.
An endeavour like the roof restaurant of the Triennale in Milan was built with a crowdfunding project managed by Terzo Valore, a Banca Prossima platform.
Since then lots of real estate managers, both big and small, the world over, have seen their business disrupted by this technological innovation.
Several real estate crowdfunding schemes are currently being offered to retail investors. However, the most common is the equity type, by which the developer offers investors shares in a company. Once the crowd has provided the savings needed to develop the project, an ad hoc corporation is created. The single social purpose of the company is normally to buy a property, to build or renovate a building when needed, and to rent or sell it with a profit.
Nowadays, CONSOB has authorized 19 equity crowdfunding platforms, and 2020 marked a +77% with more than 65 mln euros raised in 182 investment projects.
On the other hand, more qualified real estate investors prefer more exclusive and private clubs of ultra net high worth individuals to let trusted companies grow.
That is the reason why some of the most iconic buildings in Milan (such as the Poste building in piazza Cordusio) have recently been bought by club deals organized by corporate and investment advisors in private banking.
Investors are, after all, eager to diversify their business with alternative investments in non listed assets. Here is the proof.
What is next adventure then?