Real estate crowd investing under scrutiny


Berlin Real estate crowdinvesting is about many people participating in real assets like a real estate property. The industry is already feeling the consequences of the corona crisis, as the head of the largest Austrian crowdinvesting platform Dagobertinvest, Andreas Zederbauer, reports. “The demand for investment opportunities plummeted by half in the first two weeks of Corona, but has been rising since then,” he says. This is understandable for the real estate expert, whose customers come half from Austria and Germany. “People now have something else in mind than real estate projects.”

Ultimately, however, Zederbauer considers reluctance to be a temporary phenomenon. “The need for housing has not decreased in the crisis. And in the crisis there is often an escape to real assets. Therefore, the property will remain a sought-after asset. ”The Dagobertinvest platform has not yet had to complain about defaults. But it should be expected that there will be more delays, Zederbauer said.

Last year Dagobertinvest raised 21 million euros in mezzanine capital. This means types of financing that are a hybrid between equity and debt, such as subordinated loans for projects. For 2020, the company is aiming for a mark of 37 million euros. In view of the reluctance of private investors, this may prove to be too optimistic, Zederbauer suspects.

Swarm financing, also known as crowdinvesting, has become increasingly important in recent years. In 2019, the entire crowdinvesting market in Germany grew by 42 percent to 422 million euros. Cumulatively, the billion mark has been exceeded since 2011, the newsletter has calculated. In recent years, the real estate sector has been one of the fastest growing segments. In 2019, the volume there increased by 53 percent to 321 million euros.

More and more small investors have discovered digital real estate investing for themselves in times when the savings book no longer yields and in the worst case threaten negative interest rates. The real estate platforms sweeten the risk with interest rates of between five and seven percent. At the same time, no platform lacks the indication that there is a risk of losing an entire engagement if you are involved. Since nobody can rule out the failure of a project, experts always advise that the risks be spread widely.

An interested observer of the development is Thomas Olek, head of the real estate specialist Publity AG. He assumes that the corona crisis will end the real estate hype. “The real estate expertise of crowd financiers will be put to the test as well as the crisis resistance of subordinated loans,” he said in an interview. Subordinated loans are a popular financing tool for real estate crowdinvesting. In the event of bankruptcy, this loan, which is classified as own funds, is only serviced after other liabilities.

Reluctance of private investors

The industry leader Exporo is cautiously optimistic. “We still see no reluctance on the part of private investors,” says CEO Simon Brunke. However, projects can be delayed due to the Corona standstill. This is unfortunate, but also means a higher rate of return for the investor, who receives interest for the entire term. Basically, according to Brunke, the product “Exporo financing” is an investment product with advised terms, but which are not a guaranteed repayment date. “Exporo is an investment platform. You simply cannot compare our offer with daily or time deposits, ”explains Brunke.

Last year, Exporo brokered a volume of 214 million euros through its platform, and additional capital of more than 37 million euros was raised through private placements. Investors received more than 105 million euros back last year, compared to more than 34 million euros so far this year. First losses for investors cannot be excluded.

But they already result from developments from the past year. The bankruptcy proceedings for the “Portfolio Marburg” and “Portfolio Marburg II” projects were opened in October 2019. “Together with the security trustee, we are in intensive exchange with the insolvency administrator regarding the realization of the security,” says Exporo.

The bottom line is that Brunke assumes that his platform will emerge stronger from the crisis. This is because the Hamburg-based company offers various types of real estate investments – engagements in projects by project developers and investments in existing properties. Should real estate prices collapse, the business of project developers could be damaged. On the other hand, the purchase of real estate for the Exporo portfolio could then be cheap. “We are well positioned for both scenarios,” says Brunke.

Dagobertinvest boss Andreas Zederbauer remains optimistic at heart. He wants to stick to the company’s expansion strategy. He would like to gain a stronger foothold in Germany and implement between 20 and 30 percent of his projects in the future.

More: Corona crisis is changing the situation on the housing market dramatically


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