German Real Estate Crowdfunding Market is set to Boom
This is a recap and edited version of two recent reports published in crowdfund insider by and JD Alois 
The road ahead for the German real estate crowdfunding market has been cleared last month, with the threat of being excluded from the scope of application of the crowdfunding regulation, the Kleinanlegerschutzgesetzt (KASG), taken off the table. It’s expected now to embark on a rapid growth path. Although a few early crowdfunding projects popped up in the German real estate market in 2012, it has only taken off after the entry into force of the KASG in July 2015. Most real estate projects raise funds in form of subordinated loans regulated by the KASG. 
According to a report made by Michel Harms, In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. The market is thus expected to triple in size by the end of 2017. In 2016, more than 80% of the 48 projects were residential development projects (construction, renovation, rehabilitation), half of which were in big German cities, with Berlin being the top location. As mentioned, most platforms use the regulated subordinated loans, ahead of bank loans and bonds. The average loan duration is 21 months, the median interest rate is 6%.
Three leaders emerge
In the short time since 2015, three leaders have already emerged: Exporo, Zinsland and Bergfuerst, three dedicated platforms for real estate crowdfunding. Together, they make up for more than three-quarters of the real estate crowd-financing in Germany. Exporo was incorporated in 2013 by Simon Brunke, CEO, Björn Maronde, Julian Oertzen and Tim Bütecke. The company launched its first project as Exporo GmbH at the end of 2014. Since then, the platform has broken away from the pack by raising more than €64 million cumulatively, which amounts to a market share of over 40%. The platform has financed 21 projects from the beginning of 2017 alone. Many of these are large projects, at the upper limit of the German prospectus-exemption of €2,5 million. To fuel its expansion, Exporo recently raised €8 million from e.ventures, Holtzbrinck Ventures, Sunstone and BPO Capital. Zinsland was founded in 2014 by Carl-Friedrich von Stechow, CEO, Dr. Stefan Wiskemann and Moritz Eversmann. The platform launched its first project in 2015. Since then, it has financed 25 projects, 10 of which were funded in 2017, for a total of €18 million. It claims to have 2,600 members. To meet its aggressive growth plans the company expects to double its number of employees by year-end. Bergfürst was started much earlier than its competitors, in 2011, as an equity crowdfunding platform launched by Dr. Guido Sandler, CEO, and Dennis Bemmann. The platform launched its first real estate project in 2014 and pivoted shortly after to dedicate itself exclusively to real estate projects. To date, the platform has raised nearly €13 million to finance 20 real estate projects. Whereas most competitors require a minimum investment of €500, Bergfürst lets retail investors participate with €10. Bergfürst transition to real estate crowdfunding is an exception. Other equity crowdfunding platforms who fund SMEs and startups, such as Seedmatch (through Mezzany), Companisto or FunderNation, have tried their hand in real estate crowdfunding with a few projects. But they seem to have given up competing with the more specialized platforms. This is in stark contrast with the French market where the two leading equity crowdfunding platforms, WiSeed and Anaxago, became the leaders in real estate crowdfunding, head of specialized platforms such as Clubfunding, Fundimmo or Homunity.
The Newcomers
Next to the three leaders, around ten new entrants try to carve a market for themselves:
- Zinsbaustein, launched in 2016, is the number 4 with 8 projects financed to the tune of €9 million.
Others have only financed a few projects so far:
- iFundedstarted in 2015 and opened for business in 2016. It intends to attract German and international investors who want to invest in Berlin. Its average size of projects is €800K.
- Home Rocket, started in 2015, Home Rocket operates from Austria but addresses both the German and Austrian investors and developers.
- immofundingstarted in 2015, also operates from Austria.
- Renditefokusstarted in 2015.
- ReaCapitalstarted in 2017.
The latest entrant is Engel & Völkers Capital, a joint venture between real estate broker Engle & Völkers and SME lending marketplace Kapilendo which proposes retail investors to co-invest with institutional investors in real estate projects. Platforms have many innovations in store, including finding new sources of funding to accelerate their growth. Their main challenge remains to increase the awareness of Platforms. The market will also be under close watch for investor protection. As Michel Harms points out, the German real estate crowdfunding market has not yet experienced a single default. Large Housing Project in Vienna to be crowdfunded on newcomer Sarego New German real estate crowdfunding platform Sarego is offering investors a piece in a real estate project in Vienna. The project is developed by company Vermehrt GmbH who is crowdfunding one million euros for the energy-efficient renovation and modernization of Gründerzeit-old (century) building in Vienna. It is interesting to note that CrowdDesk, that supplies Sarego with a white label crowdfunding platform, operates its own real estate platform. From as little as €100, investors can access Sarego and invest in the project with an estimated return of 6.50% per annum with a term of 15 months. Sarego says they have more real estate projects in Austria that are queueing up to list on their platform, and they expect to work not only in Germany and Austria but also in Switzerland and Poland.