Crowdfunding has been around for quite some time and Singaporean investors are definitely aware of this alternative option that they can use to improve their investment returns (if you are new to crowdfunding, you can read more here). There are also some common names that we have heard in this space as well. Examples are Funding Societies, CoAssets and MoolahSense.
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Compared to the USA, in Singapore, investors do not have the option of raising equity through crowdfunding. Hence, there is only the crowdfunding of debt present here.
However, just as our previous post shows, there are many risks to crowdfunding which warrants higher return rates. Just as how debt can be secured or unsecured, one interesting advancement of crowdfunding is the move towards collateralisation. In many other countries, real estate crowdfunding is the preferred alternative investment as there is the presence of collateral in the form of property or land. A simple search on Google can prove that. The vast supply of land and apartments as compared to fewer approved loans made this even more attractive. Hence, the speed of obtaining funding and lower loan requirements are compensated from the higher rates of return. Though, this will certainly be lower than unsecured crowdfunding.
Given the relatively stable property market in Singapore, secured real estate crowdfunding will provide a good return with lower risks. Interestingly, CoAssets has recently incorporated a real estate subsidiary that focuses on asset-backed crowdfunding and was announced in January. Hopefully, it will be released soon for retail investors to have another investment alternative.
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In our view, this is definitely an attractive option. Just think about it. Having an 8% to 10% rate of return (slightly outperforming the average STI returns - 8.4%) while enjoying the safety of collateral in the form of a property that is comfortably valued more than the loan amount.
If you wish to know more, do read more on crowdfunding or visit CoAssets' website.
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