Property crowdfunding catching on

Romesh NavaratnarajahMay 5, 2015

Property crowdfunding

A new property crowdfunding platform called FundPlaces will launch in Singapore later this month joining two existing players – CoAssets and DomaCom, revealed media reports.

In a nutshell, property crowdfunding is the practice of sourcing capital needed to start a real estate development from a large group of people, usually via the Internet, while crowdfunding platforms help to connect investors with those developers who need cash.

Although these platforms provide smaller developers with a quick and efficient alternative source of capital, many home builders here still prefer the traditional means of raising funds like issuing notes, taking bank loans, or listing on a stock exchange.

One key concern over crowdfunding platforms are the vague rules as the Monetary Authority of Singapore (MAS) has yet to issue a clear framework governing the practice.

Another issue is the high risks, like failure of a development due to a company’s negligence, investors not being able to encash their securities and non-fulfilment of the promised returns.

Nevertheless, crowdfunding platforms in Singapore vigilantly perform various checks to ensure that a developer fulfils its pledge to investors.

For instance, FundPlaces requires developers to provide the necessary documents for inspection by prospective investors, while DomaCom makes sure that a property fund is registered with MAS, or by Australia’s ASIC. For CoAssets, the developer must have an office in Singapore and a local director who would be held liable in case of a default.

“For most projects, we can’t guarantee they won’t fail,” said FundPlaces co-founder Tan Kok Keong.

“That is a risk that all investors have to take. But we try to mitigate that risk by working with people who have shown themselves to be good paymasters, who are proper business people and have credible backgrounds,” he added.

Image source: Bizking2u; Wikimedia Commons

 

Romesh Navaratnarajah, Singapore Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg

POST COMMENT

You may also like these articles

S'pore bank lending falls again

Singapore's total bank lending fell yet again in March 2015, its fourth consecutive month of decline, as loans to financial institutions and manufacturers dropped, revealed latest data from the Moneta

Continue ReadingApril 30, 2015

Tuan Sing's Q1 profit up 107%

Homegrown property and investment firm Tuan Sing Holdings has registered a net profit increase of 107 percent year-on-year to $15.9 million for the first quarter of 2015. In a statement, the compan

Continue ReadingMay 4, 2015

CapitaLand revenue higher on S'pore sales

Property heavyweight CapitaLand has reported an almost 12 percent drop in group net profit to $161.3 million in the first quarter of 2015 from $182.8 million last year. But revenue was up 49.4 perc

Continue ReadingMay 4, 2015