We’ve seen crowdfunding been put to use for zany gadgets and enacting positive social change, but we’ve not yet seen it being used for investment purposes. But Crowdbaron wants to change that. It’s a Hong Kong-based startup that wants to make investing in real estate as simple as booking a hotel online. Aimed at folks who want to bolster their personal investment portfolio, the idea is that buying a small stake in one or numerous properties lets you take advantage of surging property prices in several countries.
While you are buying a share in a property, this is not a sort of timeshare for the 21st century and so you won’t be staying in the apartment or villa in which you have a stake. This is purely for the profit. So you can spread the risk, Crowdbaron lets you take as little as a one percent stake.
Crowdbaron is aiming its platform at users across Asia, with an initial focus on customers based in Hong Kong, China, and Indonesia. Founder and CEO Saeed Hassan explains to us that the startup is “targeting a less wealthy target group” than would normally take a 100 percent stake in properties – a phenomenon seen recently with wealthy Chinese snapping up properties (and potential escape routes) in Australia, the UK, the US, and many other nations. Instead, Saeed says the site is good for “middle income families who are saving for the future, and who have been burned by the stock market and are frustrated by low interest rates”. He adds:
For these individuals, there is little chance they can purchase in Hong Kong or elsewhere. This group is very large and are willing to enter shared purchase arrangements – because it opens the door to potentially higher and stable returns they otherwise wouldn’t be able to afford. It’s about lowering the entry barriers and getting more people involved.
Aside from making a profit from rising property prices, Crowdbaron investors can also earn revenues from renting out their properties, which will be unfurnished to save hassle for the crowdfunded landlords. Saeed points out that these properties will remain managed by Crowdbaron through its network of property agents, and is also responsible for finding tenants. In the event of a property being empty, Crowdbaron promises to pay investors their share of rental revenue anyway.
Crowdbaron is split between a team of four in Hong Kong, and a further four in Jakarta, Indonesia. More sales staffers are being added this month, and a Madrid office is being prepared. While its investors are mostly in this region, it’s open to global investors aside from, for tax reasons, the UK and the US. Crowdbaron’s properties are currently spread across London and Jakarta, with more in Madrid and perhaps some US cities being added soon.
Real estate crowdfunding could turn out to be one of 2013’s hottest startup – and investment – trends. I notice that US-based RealtyMogul also looks promising, and recently won a bunch of awards and plaudits.