Shake-up for SA property is looming

This is how Scott Picken, CEO and co-founder of Wealth Migrate would have it, with the crowdfunding wave expected to be a disruptor for the real estate industry.

New wave

Although crowdfunding – where projects are funded through monetary contributions from a large number of people online – is firmly entrenched in the US and Europe, SA has yet to see it take off. Joy Schoffler, founder and principal of Leverage PR says the Securities and Exchange Commission in the US has ruled that everyday citizens can participate in equity crowdfunding.

Already Wealth Migrate provides return-hungry investors access to global property through its crowdfunding platform. Investors participate with a view to buying offshore property and developments, subsequently owning a stake and receiving dividends. Wealth Migrate was recently awarded its Financial Services Board licence, paving the way for domestic investors to crowdfund property investments in the country.

Offshore property investments to date are in the region of $30 million (R398 million). Overall Wealth Migrate has clocked up over 10 000 deals to the tune of $1.43 billion (R18.9 billion) on five different continents for more than 10 years. It has partnered with developers who embark on real estate projects and helping global investors get a share of the action.

This, director at Caleo Capital Garth Wellman says, is in line with investors growing appetite for offshore markets. “Emerging markets are having a resources crunch driving currencies down. Opportunities in SA and emerging markets are available. But opportunities are bigger offshore,” Wellman explains.

Picken says investors can contribute as little as $1 (R13.28) on a property investment: “You get to invest in the same opportunity as wealthy people. With crowdfunding, you could invest in developments, yet with much less money.” Picken admits there are two reasons for SA’s slow uptake of crowdfunding; scepticism around Wealth Migrate’s offering and push-back from financial institutions and regulators. He admits, to build trust, a track record must be built first. “Crowdfunding in the First World is nice to have … In the emerging world, it is becoming a necessity.”

Local focus

For now, growing the SA investor base on local property projects is the focus. Some of the opportunities, Picken says, are to invest in eight hospital developments in SA and sub-Saharan Africa by seasoned property developer and co-founder of Wealth Migrate Hennie Bezuidenhoudt. “I am interested in developers that have long track records, long-term success and long-term results – because that is the safe option.”