With the popularity of crowdfunding property investments growing in following, South Africans now have the option to crowdfund their real estate investments through Wealth Migrate. It’s Chief Investment Officer Riaan van der Vyver, voices his opinion on why this is an ideal scenario for local investors.
Wealth Migrate’s category one licence is a game-changer
Just as crowdfunding relies on the spirit of collaboration, this is also necessary for it to become a successful solution in South Africa. Local investors will now benefit from Private Global Wealth holding a category one crowdsourcing licence from the Financial Services Conduct Authority, as this allows the company ‘’to provide its crowdfunding offering on an intermediary services basis using shares as a financial product category.” [1]
“For many early adopters of crowdfunding in Africa, particularly those using crowdfunding to raise equity, self-regulation is a challenge and an opportunity.” [2]
The real benefit to South African investors
Investors have access to a legitimate and credible ‘’funding channel for asset classes’’ through Wealth Migrate.[3] Once a sponsor passes the due diligence, a deal is put onto the platform’s marketplace, and the company takes on the responsibility of co-raising capital on the deal, with all details disclosed in full on the marketplace.
Van der Vyver highlighted that this crowdfunding method is for unlisted real estate in any alternative asset class, which makes Wealth Migrate’s role as an institutional investor easier for lowering costs and providing better transparency of deals.[4] This is enabled through a special purpose vehicle (SPV) such as a structured note.
Crowdfunding: a future-forward opportunity
The main challenge with crowdfunding real estate is the model and structure of administrative fees, as this typically ranges from 2.5%-10% and may not include the actual transaction fee.[5] Globally since 2010, the crowdfunding equity market has become increasingly appealing to individuals who want to grow their wealth but lack sufficient capital to invest without the power of a group fund.[6] More and more, investors are also looking to diversify their asset portfolios while making use of convenient online websites or apps.[7]
[1] CNBC Africa. (May 2021). ‘FSCA grants Wealth Migrate licence to offer crowdfunding services’. Retrieved from CNBC Africa.
[2] Parker, D. (October 2019). ‘Crowdfunding on the rise in Africa’. Retrieved from Creamer Media
[3] CNBC Africa. (May 2021). ‘FSCA grants Wealth Migrate licence to offer crowdfunding services’. Retrieved from CNBC Africa.
[4] CNBC Africa. (May 2021). ‘FSCA grants Wealth Migrate licence to offer crowdfunding services’. Retrieved from CNBC Africa.
[5] Shneor, R., Zhao, L., and Flåten, B. (2020). ‘Advances in crowdfunding: research and practice’. Retrieved from Palgrave MacMillan.
[6] Raymond, R. (2015). ‘Six things you need to know about crowdfunding in developing countries’. Retrieved from World Bank Blogs.
[7] Shneor, R., Zhao, L., and Flåten, B. (2020). ‘Advances in crowdfunding: research and practice’. Retrieved from Palgrave MacMillan.
