Subscribe

Crowdfunding movement targets real estate

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 12 Oct 2015
Wealth Migrate CEO and co-founder Scott Picken says crowdfunding is going to revolutionise real estate.
Wealth Migrate CEO and co-founder Scott Picken says crowdfunding is going to revolutionise real estate.

Crowdfunding and real estate are not two concepts that usually get mentioned together. However, they are both the backbone of global real estate investment company Wealth Migrate, whose mission is to empower a billion people by 2020 through access to real estate and its "wealth effect".

The company is founded by two South Africans, Scott Picken and Hennie Bezuidenhoudt, and its headquarters are in Centurion.

Wealth Migrate's real estate crowdfunding movement allows investors to pool money together to purchase a portion of a property, and it all happens entirely via the Internet. Through online portals, investors are able to sign up, choose an investment, make the investment, manage their global portfolio, and get paid returns on their investments.

"It is no different to what Uber is doing to the taxi industry. Bringing investors together with property providers and cutting out the middlemen, reducing costs, increasing efficiency and increasing accessibility," according to Picken, Wealth Migrate CEO and co-founder.

When asked why he decided to use technology as a mechanism for investing in property, Picken simply responded: "Why not? There are on average 16 different fees in the traditional methods and too many middlemen. Only 12.9% of the world's population has access to real estate and of that 12.9% of people, only 1% will retire wealthy. The facts show the current system doesn't work and therefore technology is needed to disrupt and enhance this industry," he says.

Crowdfunding involves raising funding for a project from a large number of people, typically via the Internet. One of the most successful and well-known crowdfunding companies is US-based Kickstarter, which helps artists, musicians, filmmakers, designers, and other creators fund projects.

Local Thundafund is a South African success story after funding over 140 projects worth a total of over R5 million since its 2013 launch.

"For as long as humans have accumulated wealth, land and real estate has been the number one vehicle of growing and preserving wealth," according to Wealth Migrate, which says 49% of the world's wealth is held in real estate.

"However, out of seven billion people globally, only 12.9% of people have access to real estate and the subsequent wealth affect it causes."

Picken says the world's greatest challenge is the wealth gap, which sees the top 1% controlling the world's wealth. Empowering the other 99% is his goal.

"It is not a matter of if it will happen, it is a matter of ensuring it does happen, to create a better and more sustainable planet for all."

Getting real

Disruption in the real estate industry is Picken's plan, as is giving as many people as possible access to wealth-building assets "previously reserved for only the top echelon of investors worldwide".

During the global financial crisis in 2008, he realised the significant opportunities undervalued property markets presented to investors and was inspired to take advantage of the growing crowdfunding movement to open access to global assets to investors.

To date, the company has helped people invest in commercial property from five continents. An example of how the project works for investors was the purchase of a medical portfolio of seven buildings to a value of $16 million. The money was raised from investors all over the world and Picken says the outcome speaks for itself.

"Since we bought the buildings a year ago, the returns have been cash on cash of over 10% and increase of equity of over $2 million. Clients have been paid each quarter and more than 80% have reinvested in other projects."

Changing perceptions

The idea of crowdfunding also comes with its own group of naysayers but Picken says the company is slowly getting people to come around to the idea.

"It is in a constant state of flux, moving from early adopters to disruption. It is taking hold so fast around the world and the regulators have even come to the party."

Wealth Migrate was awarded its compliance certificate from the US's Securities and Exchange Commission, and is building compliance in the UK, Australia, Singapore, Malaysia, Hong Kong and South Africa.

Picken says technology continues to disrupt industries and he believes crowdfunding is going to revolutionise real estate, investing and wealth, and "allow everybody access to the best opportunities and the best partners globally".

The goal is to be "the global trusted real estate marketplace" and to empower a billion people through the wealth movement by 2020, he says.

Share