March 28, 2017 (STLRealEstate.News) It was only a matter of time before crowdfunding platforms made their way into the real estate sector today. Often something that deters a lot of individuals from making investments in real estate, high prices drive away most middle-income individuals from playing around in American real estate. But, with the rise of third-party crowdfunding platforms, most notably of Chinese origin, middle class people can get in on a piece of the real estate pie – no matter where they live.
Take Brooklyn for example. Two decades ago, if you asked a New Yorker where the most authentic Chinese food could be found, they would point you to Chinatown in lower Manhattan. But, today, if you ask that same question again, you could be rerouted to Brooklyn, a borough where millions of Chinese are getting in on crowdfunding brownstones using their Yuan currency. By using these platforms, Chinese investors are able to skirt around government regulations for transferring their currency into the American dollar. The result is a piece of the Brooklyn pie, plus free currency exchange to help them get their hands on the greenback.
Since the Great Recession, snapping up prime real estate in coastal American cities has become an increasingly popular activity among China’s wealthy. In 2014, for the first time, more Chinese bought Manhattan apartments than did Russians, reported Reuters. Today, Brooklyn is where it’s at, with the price of Brooklyn town homes and apartments growing 16 percent between 2015 and 2016, while Manhattan properties decreased by 1 percent. Chinese citizens are fully aware of the Brooklyn opportunity, and they aren’t going to let it pass them by.
What do you think about crowdfunding as a means to secure real estate? It should be interesting to see what effects the approach has with regards to home-ownership and resale processes down the line.