By Thomas Schneider.
Real Estate investments have long been left behind within the investment world which otherwise has been significantly transformed by technology. For investors, this has reduced the opportunities for to build tailored real estate investment portfolios.
However, financial technology (fintech) has recently come into the spotlight of US and European Venture Capital investment. As fintech challengers have made successful inroads in sectors such as remittances, payments and loans, the once archaic retail banking system has been transformed.
Global fintech venture investments tripled from $4.05 billion in 2013 (Accenture) to $12.2 billion in 2014 ($1.48 billion in Europe),. Although many of these start-ups focus on core banking products such as foreign exchange, card payments, the Bacs system, or consumer loans, there has not been much development of technology for investment services.
This is a remarkable opportunity for the right ideas since “buy-side” platforms are few and far between. Take the likes of Nutmeg for example who have sprung from the ground within a couple of years, raising $37m to help cut out the middleman. By being a user-friendly, technology-based, transparent platform, Nutmeg has successfully been able to introduce investing in the markets to a new audience.
In real estate investment, the best opportunities and the best services have traditionally been the reserve of a very closed network. This network with its large pool of financial backing and industry connections, restricted the access of the everyday investor to such investments. It is clear that by bringing together knowledge and understanding of real estate investment and online technology, real estate investment services have something to gain from the fintech treatment.
The goal is not to risk losing the quality of a skill-intensive service in the process, especially when you are providing direct investment access. At BrickVest, our vision is to provide investors with the full spectrum of high quality fund management services, delivered through a straightforward online portal. Users are provided global deal sourcing, ongoing risk management and asset ratings through to thorough due diligence, monitoring and fund reporting services, typically reserved for major real estate investment players.
We want investors to have a full range of direct real estate investment opportunities readily available and be able to easily build their portfolios online through a transparent, data-driven approach. The multitude of alternative investment platforms that have come to market in recent years has really captured the imagination of investors. Certainly real estate investment could see positive change from using sophisticated online platforms that go beyond a pure marketplace for investors and financial products.
Real-estate ‘crowdfunding’ at large was a $1 billion industry in 2014 and is expected to grow to more than $2.5 billion this year, according to a report released recently from industry research firm Massolution. US-based firms like Fundrise or RealtyMogul offer a platform more similar to online brokerage services, directly linking real-estate developers and investors. While this model is well suited to the US and its regulatory twilight zone, it cannot reasonably be imitated in Europe. Building a pure marketplace for real estate assets adds little value – instead the emphasis will likely reside in providing a full range of investment management services to help users make informed decisions. This may well prove to be where the crowds ultimately flock.