Crowdfunding comes to the property sector

Investors have often found it easier to buy into the idea of property investing than to access the asset class itself. Now however, the real estate market is using technology to open itself up to a wider array of investors. 

London-based start-up BrickVest is one of those at the forefront of this trend, using crowdfunding technology to allow individuals to buy into big-time commercial real estate developments across the globe.

“The whole idea of BrickVest is linking wealth to an asset class which people don’t have access to,” explains CEO and co-founder Emmanuel Lumineau. “I want to link the institutional assets to global investors. Because once you link the two, you have a liquid market.” 

Given the low interest rate environment and sluggish returns in the major asset classes, investors are increasingly turning their attentions to alternative assets. In addition, real estate has the benefit of being uncorrelated to equity and bond markets.

But allocations remain low, believes Mr Lumineau, formerly of Goldman Sachs and possessing a background in both tech and real estate, with most investors having alternatives exposure at around 3 per cent of their total portfolios, when they should be closer to 20 per cent.

But accessing the asset class has not always been as easy as it could be. “Property is an industry where people can make so much money without making too much effort. There is no pressure to change,” he explains, while investments in the sector typically have to go through multiple layers of human interaction. “These people might claim they are adding value, but they are an expense. You might have 20 people needed to get $1m in funding from a family office. Why can’t this be automated through the use of technology?”

The idea behind BrickVest, which launched last year, is simple. Sponsors – real estate investment firms, portfolio owners, operators and developers – can raise equity by listing their assets on the platform, once they have gone through the requisite application procedures and due diligence. Investors can then browse the pre-vetted real estate investment opportunities online and allocate where they choose. Once they have allocated, investors are then free to sell those investments on to other members, thereby creating a liquid market.

BrickVest’s minimum investment is set at €1000, not in attempt to attract mass retail investors, says Mr Lumineau, but rather to allow investors to try out the platform for themselves. Once people have taken the step to become members, which is free, 20-30 per cent then go on to invest, he claims, with most investments so far being in the €10,000 to €50,000 range.

The firm has attracted a diversity of members, but most of the investments come from professional clients, he insists. “Retail is looking for a bargain. They will go after the hot trends. Professional investors get that we are trying to be the Louis Vuitton of investing.”

All of the technology has been developed in house. “If you want to innovate you almost have to become your own software company,” he explains. “If you don’t see yourself as that you have failed. And most of the banks, who are running legacy systems, don’t see themselves as that.”

As to the future, Mr Lumineau is clearly ambitious. A second office has already opened in Berlin and there are plans to launch an R&D centre in Paris, Berlin or London, while next year they will open an office in Singapore to cater to the Asian market which already makes up 22 per cent of its clients. There is also talk of a Shariah-compliant platform, as well as the potential of expanding away from real estate.

“I see myself as a software company that provides software for one silo – namely real estate. Everything we do now we could do for infrastructure or technology. We can disrupt the whole thing.”