The concept of gathering funds from contributors for an initiative has done well in the world of technology and other areas. But will it benefit the Indian real estate market? Read on to know more about this interesting concept and how it benefits the real estate industry at large.
Crowdfunding as an Industry
Since crowdfunding only attracts interested users into the realm of investors, the idea that is being crowdfunding usa funded usually sees victory sooner than later, unlike when other methods are employed. As an industry, it has been quite popular with businesses that are driven by consumers, offering concrete products.
Everything You Need to Know About the Crowdfunding Model
Crowdfunding is aimed at providing an approachable platform on the web for investors to contribute to projects that interest them. For the real estate sector, this model would be pretty much the same, except that the assets looking to raise funds would be a project or a land deal. Every investment made can be monitored or customised from the same platform so that it is easily accessible to all investors. The best part is that you don’t have to travel to other places to find a good asset to invest in, because everything is accessible with a few clicks of the mouse.
The Benefits of Crowdfunding
If you are a small-scale investor who is okay with risking huge sums of money, crowdfunding in the real estate market could be a great option for you. The amount of capital that you will have to invest in a project is always limited, and this is profitable because you can be a part of a huge deal. As more investors come together to invest in the same project, the project is finally set in motion with a combined effort.
Crowdfunding in the Indian Real Estate Sector
Because crowdfunding is such a simplistic concept that involves the showcasing of all projects seeking funding on a website, the real estate sector could benefit immensely from it.
SEBI (Securities and Exchange Board of India), however, has proposed a new set of rules for crowdfunding through various web-based platforms. According to this, only those entities which are not linked to a business group having turnover of Rs 25 crore or more would be allowed to take the crowdfunding route. Also, any real estate entity which has been in existence for four years or more would not be allowed to explore this option.
Helping Stalled Projects
Presently, the Indian real estate sector has been swamped with a lot of projects that are incomplete and frozen due to lack of funds. Failure to pay debts has led to banks withdrawing funding for such projects, and this is where crowdfunding could step in and lend a helping hand.
The Crowdfunding Market in India
The crowdfunding for real estate developers market in India has been subjected to numerous fraudulent deals, looking to hog money for reasons very different from what the project claims. Because the industry has no laws governing the functionality of the service, crowdfunding is a rather unorganized solution for investors willing to risk their money. The only way to save the industry would be to introduce some stringent rules and have a solid mechanism in place, such that every transaction is well-regulated.
