Blog‎ > ‎

THE CASE FOR GLOBAL REAL ESTATE CROWDFUNDING

posted Oct 18, 2014, 1:51 AM by J Shaw   [ updated Oct 18, 2014, 1:52 AM ]
When Scott Picken, founder and CEO of The Global Real Estate Marketplace(TM) Wealth Migrate, discusses the reasons for investing overseas, he returns time and time again to the yearly migration of birds.

“When the birds are up north and winter arrives, they move south where there’s a better environment,” he says. “Well, business is not different.”

That’s a simplification, of course, but Picken fully believes in the metaphor, partly due to his own international outlook and experiences, and partly due to his vision for where the global real estate market is headed.

Picken, who was born in South Africa, has spent 9 years living, studying, and working in the UK, and has travelled extensively throughout Europe, Asia, Australasia, Africa, the Middle East, Central America and North America.

The time living abroad has shown him the difficulties of managing properties from overseas, while travelling exposed the potential opportunities that can be made available to those who look at real estate at the global level.

Picken’s belief in international markets became even stronger in the aftermath of the 2008 recession.

“In 2008-09, the real estate market had completely crashed [in America], it was the worst it had ever been,” he noted. “Yet in other markets, like Australia, the economy never went into recession, it was the only one in the G20 not to, and the property market actually grew by 8.6 percent. We invested heavily in Australia in 2009 and had results well above global averages.”

Wealth Migrate doesn’t neglect developed nations or (more specifically) the US market. Just this summer, for example, the company completed an investment in a group of medical buildings in Georgia. However, it is not limiting itself to just a single market or region.

The company sees particularly strong potential in Asia and Africa, with the Asian market being an especially interesting one. Just one manifestation of the region’s cheerful prospects, Picken thinks, was the recent IPO of Chinese ecommerce behemoth Alibaba, which went public in September with a valuation of $170 billion — the largest flotation for a technology firm to date. The company’s value has little to do with its prospects in the US or Europe, Picken noted, and shows the high growth expectations in Asia’s future.

Another, less visible, sign of things to come is the growth of millionaires in the region. A 2013 Capgemini report, for example, found that the number of individuals with at least $1 million in investible assets is expected to grow by double digits annually “during the next few years.” The region has plenty of investors looking for opportunities, both within Asia, and elsewhere. This is why Wealth Migrate was thestrategic partner with CoAssets in EPIC, the first real estate crowdfunding event in Asia, in July 2014.

Wealth Migrate is also actively involved in MIPIM Asia, taking place in December, and will be discussing how crowdfunding is changing Asia by giving investors access to the world, and worldwide investors access to the continent.

Picken believes that global real estate crowdfunding can create a “bridge of safety” between the emerging and developed worlds: investors in emerging countries want a way to invest safely in developed world, while people in the first world aren’t happy with the returns they’re getting, and want to invest in the emerging world.

Because of a lack of trusted partners, however, investors from both emerging and developed nations are prevented from investing in potentially lucrative deals. That’s where Wealth Migrate sees an opportunity to make a difference.

The company has a web of established partnerships in a number of countries (and stringent guidelines for finding new partners) across the world that allow it to not only locate the deals that fit well within its portfolio, but to also navigate potentially perilous regulatory waters.

Initially, Picken explained, the company attempted to fully understand the legislative nuances of every nation it considered expanding into.

“After five years, we decided that it wasn’t up to us to understand everything,” Picken reflected. “It was our responsibility, however, to find the expert in every country that understood the regulatory environment. It’s been extremely challenging, and it will take time, and we understand that we’ve got to jump through all these hoops. It’s a lot more difficult than trying to just do it in America. But we also understand that in the long term, it will create the most value and the most benefit to everybody. It’s a necessity.”

Picken explained that for each project the company invests in, the aim is for 50 percent of the money to come from investors from within the nation, and 50 percent to come from international investors. This ensures that the profits realized from a successful investment don’t all flow out of the country. It also helps to foster trust between investors on the ground and those who are investing from overseas.

Aside from the potentially high returns associated with investing in the developing world, Picken said, there is also the opportunity to help build hospitals and houses, which will help to improve the overall quality of life for those in developing nations.

The company, for instance, is currently building ten hospitals in Picken’s home country of South Africa, with plans to continue hospital building in Kenya and Zambia next. Africa has 25 percent of the world’s disease burden, Picken said, but only 1.3 percent of the health workers.

“Crowdfunding is now allowing us to build hospitals at a far more rapid pace,” he explained. “Is there a better story for crowdfunding than creating wealth and changing the planet for the good in the process? It truly is a win-win.”

Such projects, while crucially important, are more hands-on and are riskier, Picken admitted. The potential payoff is, accordingly, also much higher.

As mentioned above, Wealth Migrate attempts to mitigate the risk by finding the right partners to work with. More generally, to date, the company has tended to invest primarily in Commonwealth nations — those who were at one point part of the British Empire, and whose laws are based at least partially on British law, making the regulatory environment easier to navigate. Now, however, Wealth Migrate is broadening its scope, and is focusing heavily on other Asian and African nations going into the future.

There is another development that’s making the prospects for international investment look happier than just several years ago. The fact that many countries are now exploring equity crowdfunding laws means that it may soon be easier to invest in global real estate development (and other) projects than ever before.

Wealth Migrate believes that now is the right time for investors to take a lesson from the migratory patterns of birds, and to begin looking further afield for opportunities to invest in.

“Property is cyclical, business is cyclical,” Picken said. “It’s better to be in the right environment at the right point of the cycle, than to persevere aimlessly because of where you live.”

Posted from : http://www.crowdsourcing.org/editorial/the-case-for-global-real-estate-crowdfunding/34194