Crowdlending, a new source of real estate financing
The technology is revolutionising real estate investment by opening up investment opportunities to private individuals that were previously denied to them. In real estate crowdlending, private individuals can join together to lend money to real estate companies to finance development projects or refinance existing assets. This participatory investment approach has gained popularity in recent years, especially in Anglo-Saxon countries, Germany and France. In Switzerland, this model is gaining momentum and offers numerous advantages to investors, developers and property owners.
Investors benefit from fixed interest rates in Swiss francs. Unlike traditional savings accounts, which often offer negligible returns, real estate crowdfunding offers attractive returns and is therefore an interesting alternative for those who want to maximise their income. In addition, the minimum investment required is affordable. This widens the circle of investors and allows them to diversify their real estate portfolios by investing in different short- and medium-term projects while avoiding the volatility of the equity markets.
Optimise financing structures
Real estate crowdfunding is not a substitute for banks, but complements the equity of real estate developers. The loans granted by investors are subordinated and secured by real estate, which provides security in case of default. This approach allows developers to focus on developing existing and new projects without tying up a large part of their capital in ongoing projects. This allows them to complete their financing quickly and avoid diluting future profits from their businesses by using external financing partners.
Property owners now have access to an additional source of financing to add value to their assets. They can use the funds received for renovations and improvements to their properties and thus optimise the financial structure of their property portfolios. This financial flexibility is a great advantage for owners who want to increase the value of their properties while maximising returns.
Apart from the individual benefits, real estate crowdlending also contributes to Switzerland’s economic and social dynamism. By encouraging the creation of new housing and the renovation of existing assets, it meets the housing needs of the local population. The increasing demand for housing in Switzerland, especially in urban areas, requires high investments in the real estate sector. Real estate crowdfunding offers an innovative solution for financing these projects and thus contributes to the country’s economic growth. Furthermore, by supporting real estate projects, real estate crowdlending creates employment opportunities in the construction industry and related service sectors.
Conclusion
In summary, real estate crowdlending is an innovative source of financing for the real estate sector in Switzerland. With undeniable benefits for investors, developers and property owners, it opens up new perspectives and appeals to a growing number of people in Switzerland with a
growth of over 400% in six years and a volume of CHF 142 million1 by 2022. This model offers an interesting alternative to traditional investments and contributes to the democratisation of real estate investments in Switzerland.