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      Real Estate Crowdfunding for Commercial Properties in India

      • 5 min read
      • Last Modified Date: February 7, 2024
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      Welcome to the future of real estate investing in India! Gone are the days when investing in commercial real estate required deep pockets and exclusive connections. Today, we’ll take a look at the exciting world of real estate crowdfunding, where people like you can band together to unlock the enormous potential of the Indian commercial property market. Prepare to see a paradigm shift in how we approach investing as we investigate the power, accessibility, and exciting opportunities presented by commercial real estate crowdfunding in India.

      How Does Real Estate Crowdfunding for Commercial Properties Work in India?

      Real estate crowdfunding has emerged as a game changer in the Indian commercial property market, providing investors with a new way to access opportunities and earn high returns. But what precisely is real estate crowdfunding and how does it operate in relation to commercial real estate in India?

      Real estate crowdfunding basically entails collecting small sums of cash from numerous investors to fund a real estate project. As a result, investors can take advantage of profitable investment opportunities that would otherwise be out of reach due to strict entry requirements and low minimum investment amounts. With the rise of digital platforms, real estate crowdfunding has become more accessible and efficient, providing investors with a smooth and transparent process.

      According to a KPMG report, the Indian real estate sector has seen a significant shift toward the use of technology, with the introduction of real estate crowdfunding platforms serving as a key driver of this transformation. According to the report, the Indian real estate crowdfunding market is expected to be worth $2.5 billion by 2025, with a compound annual growth rate (CAGR) of more than 20%.

      Who Are the Key Players?

      In India, commercial real estate crowdfunding typically involves three key players: the developer, the investors, and the crowdfunding platform. The developer proposes a real estate project and lists it on a crowdfunding platform, outlining the project’s details, expected returns, and required minimum investment. Interested investors can then browse the available projects on the platform and choose the one that best fits their investment objectives.

      Investors can typically invest in real estate crowdfunding for commercial properties in India with as little as INR 5,000, making it an accessible investment option for a wide range of individuals. In return, investors receive a share of the rental income generated by the property or a share of the profits generated upon the sale of the property.

      What Are the Advantages of Real Estate Crowdfunding?

      Real estate crowdfunding has several advantages over traditional real estate investment avenues, particularly for investors interested in commercial properties in India. Below, we look at some of the key benefits that make commercial real estate crowdfunding a compelling investment option.

      1. Diversification and Access to Lucrative Investment Opportunities

      Real estate crowdfunding allows investors to diversify their portfolios by investing in multiple real estate projects with a small amount of money. Traditional real estate investments only allow wealthy individuals and institutional investors access to high-yielding projects. However, real estate crowdfunding platforms democratise access to these lucrative opportunities and offer investors a broader range of investment options.

      1. Lower Minimum Investment

      Real estate crowdfunding for commercial properties in India enables investors to invest in high-quality projects with a much lower initial investment. Investors can begin with a small amount of money, making it an appealing investment option for individual investors who lack the financial means to invest large sums of money.

      1. Transparency and Control

      Platforms for real estate crowdfunding give investors more transparency and control over their investments. Investors can obtain detailed information about the projects in which they are interested, such as financial projections, project timelines, and expected returns. Furthermore, investors have control over the projects in which they choose to invest, allowing them to tailor their investment portfolios to their specific investment objectives.

      1. Passive Income Generation

      Real estate crowdfunding for commercial properties in India enables investors to generate passive income from the property’s rental yields. This is particularly attractive for investors seeking regular cash flow from their investments.

      1. Mitigation of Risk

      Due diligence is performed on the projects listed on real estate crowdfunding platforms to ensure that they meet certain investment criteria and minimise risk for investors. Furthermore, investors can diversify their portfolio across multiple projects, reducing risk.

      Tips and Tricks for Successful Real Estate Crowdfunding

      Real estate crowdfunding for commercial properties in India provides investors with a one-of-a-kind way to enter the lucrative real estate market. However, as with any investment, it comes with its own set of risks that must be carefully considered. The following are some pointers and tricks to help investors succeed with real estate crowdfunding.

      1. Conduct Thorough Due Diligence

      Conducting extensive due diligence on the project and the crowdfunding platform is one of the most important factors to consider before investing in a real estate crowdfunding project. Investors should carefully review project details such as location, property type, expected returns, and project timeline. They should also look into the crowdfunding platform’s track record, fees, and market reputation.

      1. Diversify Your Portfolio

      Diversification is critical for risk management in real estate crowdfunding. To reduce their exposure to any one project or property, investors should consider investing in multiple projects in different locations and property types. This method can assist in ensuring that any losses in one investment are offset by gains in others.

      1. Consider the Sponsor’s Experience and Reputation

      When evaluating real estate crowdfunding projects, investors should also consider the sponsor’s experience and reputation. Sponsors with a proven track record of success are more likely to deliver on their promises and provide investors with high returns. Furthermore, sponsors with a strong market reputation can instil confidence and security in investors.

      1. Monitor Your Investment

      Investors should keep a close eye on their real estate crowdfunding investments to ensure that they are on track and performing as expected. Monitoring can help identify potential risks or issues early on, allowing investors to take corrective action before it’s too late.

      Key Takeaways

      • Real estate crowdfunding for commercial properties in India is a novel investment option that enables individual investors to pool small sums of money to fund real estate projects.
      • The Indian real estate crowdfunding market is expected to be worth $2.5 billion by 2025, growing at a compound annual growth rate (CAGR) of more than 20%.
      • Diversification, a lower minimum investment, transparency, passive income generation, and risk mitigation are all advantages of real estate crowdfunding over traditional real estate investment avenues.
      • To achieve success in real estate crowdfunding, investors should conduct thorough due diligence, diversify their portfolio, consider the sponsor’s experience and reputation, and monitor their investments on a regular basis.
      • Real estate crowdfunding platforms are a key driver of the Indian real estate sector’s technological transformation, providing a seamless and transparent process for investors to access opportunities and earn high returns.

      To Summarise

      Like residential real estate crowdfunding, commercial real estate crowdfunding provides investors with a low barrier to entry, making it an attractive investment option for those looking to diversify their portfolio. It also gives developers and real estate firms access to a larger pool of potential investors, allowing them to raise capital more quickly and easily than traditional methods.

      Assetmonk, India’s cutting-edge alternative investments platform, also provides commercial real estate investment opportunities to its investors. Investors can easily gain exposure to this asset class by investing in pre-vetted commercial real estate projects through its platform. Investors can enjoy the benefits of commercial real estate without the hassle of property management with Assetmonk, making it an appealing investment option for those looking to diversify their portfolio with alternative investments.

      Related Articles: What is Crowdfunding | How Crowdfunding Works

      REITs vs Real Estate Crowdfunding – Here is the difference every real estate investor should know

      FAQs

      Q1.Is real estate crowdfunding legal in India? 

      Crowdfunding for real estate is acceptable in India as long as it adheres to the guidelines established by the Securities and Exchange Board of India (SEBI).

      Q2.How to invest in real estate crowdfunding in India? 

      Through a number of online platforms, including Assetmonk, a platform that is registered with SEBI and provides investment opportunities in both commercial and residential properties, you can invest in real estate crowdfunding in India.

      Q3.Does crowdfunding need to be paid back? 

      Yes, crowdfunding does need to be paid back. Crowdfunding participants receive a return on their investment, typically in the form of a percentage of the project’s profits.

      Q4.What are the limits for real estate crowdfunding? 

      The crowdfunding limits differ depending on the platform and the project. In general, there is no limit to the amount that can be raised through crowdfunding, but individual investors may be limited in their investment.

      Q5.How much money can you make from crowdfunding real estate? 

      The amount of money you can make from crowdfunding real estate is determined by the project’s performance and the terms of the investment. Depending on the risk and return associated with the project, investors can earn returns ranging from 8-20% per year.

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