Ten years ago, in 2014, real estate crowdfunding (or participatory financing) arrived in France. At the time, its investment offer was innovative: access to real estate for a few tens of euros, online subscription plus increased returns in a short period of time, from twelve to thirty-six months. The locomotive of crowdfunding in France, with two-thirds of national fundraising, the real estate sector will weather its first storm.
This investment, which funds the operation of real estate agents or development programs, is suffering from falling sales and falling prices. The trigger was a sudden increase in interest rates on loans, which undermined the purchasing power of households in the area of real estate. Faced with cautious banks, some no longer had access to credit, thinning the ranks of buyers.
It’s a cold shower on the planet of real estate crowdfunding, which has been riding a booming market since its inception. “This year the collection is down 25% to 40% depending on the locations,” points out Bertrand Desportes, partner at Mazars France, audit group. In addition, some projects financed between 2021 and 2022 will not take place on the planned date.
Delays of more than six months (the most critical) are accumulated and increase from 6.61% in 2021 to 15.15% at the end of 2023. “With the crisis, this beautiful mechanism stopped. Until the operation is fully commercialized, the professional cannot repay the money to his creditors, including crowdfunders. explains Yves Gambart de Lignières, asset management consultant in Vannes (Morbihan).
Mobilized crowdfunding platforms indicate that they are negotiating with stuck professionals to find a way out. “In the face of a clear slowdown in sales, these players first of all need to be given space to relax, and therefore time,” comments Frédéric Maxwell, Deputy CEO of Eternam, a property management company investing in this asset class. “We offer borrowers the option to repay part of the capital and then spread the payment of the balance and interest over time,” says Quentin Romet, founder of Homunity. “The search for compromise is permanent, as are the follow-up actions,” adds Alexandre Toussaint, president of Baltis.
Some sites state that with this delay they will charge the borrower additional interest, thus a future bonus for savers. “If the scenario doesn’t work out, we can take legal action as a last resort”, explains Matthieu Degli Innocenti, founder of Tokimo. At the moment, the money of the affected savers is blocked without a specific return date. There is also the risk of capital loss should the defunct operator go bankrupt in the coming months.
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