Experts: the importance of crowdfunding for the overall property market continues to grow
Crowdfunding has become an almost traditional source of capital for medium-sized and smaller housing developers, and, together with bonds, it has already entered the sphere of business centre development. As the number of investors grows, this instrument will increasingly compete with bank financing, industry participants said at the annual conference of the Lithuanian Real Estate Development Association "Core".
The conference, which brought together 500 professionals from the Lithuanian real estate market, was the first time that financial technology topics had their own auditorium, but they were already naturally discussed in the main hall. For example, Martynas Zibuda, CEO of Eika Development, who discussed trends in the commercial real estate segment, said that crowdfunding and bonds are becoming a real salvation for office developers in a moderate market.
"Of course, all developers prefer bank financing, but it is tied to leased space and tenant contracts. Today, the supply of office space far outstrips the demand, so bank financing becomes available much later than developers had planned. This is where crowdfunding or bonds come to the rescue, as they are the main financiers of business centres at this stage of a project. The Lithuanian market is unique in that we have access to financing from natural persons. It is currently helping office developers to complete their projects and survive on a diet while looking for tenants," said M. Zibuda.
Kestutis Adamonis, a partner and lawyer at the law firm Sorainen, agreed.
"Crowdfunding has become the main source of initial financing for most smaller developers. And I am very happy, because probably many of us in our community have invested in real estate projects through such platforms. Larger developers are more inclined towards bonds and it seems that this debt instrument will remain relevant for some time. I hear from the market that non-public bond offerings are already slowly "cooling off" due to the diversification of larger capital, but public bond offerings have the potential to gain momentum, as evidenced by the last few very successful ones. The market may benefit from turning to the retail investor, who is already familiar with these instruments and can successfully lend EUR 1-10 thousand to developers and thus increase the availability of debt capital," said Adamonis.
According to the crowdfunding platforms, while seven years ago this instrument was only considered if bank financing was not available, today it is the first choice among all other alternatives. And as the number of investors continues to grow, this financial instrument is becoming more and more competitive with bank offers.
According to Martynas Stankevicius, Head of the Röntgen platform, crowdfunding has already found a clear role in the real estate development market, which will continue to grow in the future.
"At the property development stage, crowdfunding is the main choice for some developers, regardless of their size. We are the bridge for developers from site acquisition to bank financing. And as the number of investors continues to grow, this financing instrument will become even cheaper", said Martynas Stankevicius.
Experts: the importance of crowdfunding for the overall property market continues to grow
Crowdfunding has become an almost traditional source of capital for medium-sized and smaller housing developers, and, together with bonds, it has already entered the sphere of business centre development. As the number of investors grows, this instrument will increasingly compete with bank financing, industry participants said at the annual conference of the Lithuanian Real Estate Development Association "Core".
The conference, which brought together 500 professionals from the Lithuanian real estate market, was the first time that financial technology topics had their own auditorium, but they were already naturally discussed in the main hall. For example, Martynas Zibuda, CEO of Eika Development, who discussed trends in the commercial real estate segment, said that crowdfunding and bonds are becoming a real salvation for office developers in a moderate market.
"Of course, all developers prefer bank financing, but it is tied to leased space and tenant contracts. Today, the supply of office space far outstrips the demand, so bank financing becomes available much later than developers had planned. This is where crowdfunding or bonds come to the rescue, as they are the main financiers of business centres at this stage of a project. The Lithuanian market is unique in that we have access to financing from natural persons. It is currently helping office developers to complete their projects and survive on a diet while looking for tenants," said M. Zibuda.
Kestutis Adamonis, a partner and lawyer at the law firm Sorainen, agreed.
"Crowdfunding has become the main source of initial financing for most smaller developers. And I am very happy, because probably many of us in our community have invested in real estate projects through such platforms. Larger developers are more inclined towards bonds and it seems that this debt instrument will remain relevant for some time. I hear from the market that non-public bond offerings are already slowly "cooling off" due to the diversification of larger capital, but public bond offerings have the potential to gain momentum, as evidenced by the last few very successful ones. The market may benefit from turning to the retail investor, who is already familiar with these instruments and can successfully lend EUR 1-10 thousand to developers and thus increase the availability of debt capital," said Adamonis.
According to the crowdfunding platforms, while seven years ago this instrument was only considered if bank financing was not available, today it is the first choice among all other alternatives. And as the number of investors continues to grow, this financial instrument is becoming more and more competitive with bank offers.
According to Martynas Stankevicius, Head of the Röntgen platform, crowdfunding has already found a clear role in the real estate development market, which will continue to grow in the future.
"At the property development stage, crowdfunding is the main choice for some developers, regardless of their size. We are the bridge for developers from site acquisition to bank financing. And as the number of investors continues to grow, this financing instrument will become even cheaper", said Martynas Stankevicius.
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"Trečia diena" UAB, which operates the Röntgen platform, is a licensed crowdfunding platform. The platform is governed by the EU Crowdfunding Regulation and is supervised by the Bank of Lithuania in accordance with the law.