The property industry is undergoing a major transformation in the UK. Even though you cannot yet complete a transaction without a stack of papers, wet signatures, and multiple personal meetings with estate agents, at the Investor Property Show 2019 we clearly saw the traditionally conservative industry inching towards the light.
The majority of reasons for investing in property in the UK largely remain the same as they always were: since people are being forced out of the housing market, about 20% of the population is going to be renting by 2035, which means that bricks and mortar will remain a robust asset class. Investing in property is relatively simple; it’s easier to understand than stocks and obtaining finance is reasonably straightforward. Besides, a diligent investor could take advantage of the cheaper pound and the fact that pre-Brexit jitters brought the prices for commercial property in the UK way down.
Not surprisingly, the interest in purpose-built student accommodation at the Show was off the charts. Brexit or no Brexit, the UK remains a global Mecca for those seeking a marketable higher education, and the student turnover in the country is not showing any signs of slowing down. In broader terms, buy-to-let remains the pinnacle of smart investments in property, but student housing, in particular, is something investors are looking at very closely because it is a hands-free investment that can be easily tokenised on the Smartlands Platform solving the liquidity issue that persists in real estate.
Segwaying smoothly into asset tokenisation. The term caused almost every eyebrow at the Show to rise; surprisingly, 90% of asset managers and financiers we talked to did not know what it is. Trying to explain the concept only complicated things: the majority of real estate professionals in the UK are perfectly content with the way things are – during the Show, a pen and a notebook were still the most popular giveaways at every stand and booth.
However, the ingenious few that we have had the privilege of sitting down with do see the trend: the technology and regulations are now in place to take crowdfunding property investment to a new level, and the bulging UK real estate market presents many opportunities to bold entrepreneurs. The few UK’s real estate crowdfunding platforms have yet managed to pool investments into commercial properties or social experiments, but the market for office buildings, high-end properties, retail and shopping centres, student accommodation remains almost untapped.
Through asset tokenisation, investing in fractional ownership becomes an attractive opportunity for virtually any member of society – from a head of a global property fund to your neighbourhood grocer. And the ones who keep their fingers on the pulse of this astonishing transformation are going to be the first at the treasure trove.
For instance, Lowry Capital that specialises in bridge financing of semi-commercial and commercial property throughout England, Scotland and Wales is a possible strategic fit for Smartlands. Arnoldas Nauseda and Richard Basso, Director of Lowry Capital, have discussed a long term built-to-rent tokenisation project, short term and long term financing, and were delighted with the results.
Kingswood Associates, Montague Properties, Minerva Capital Partners, Sourced, and Cogress – all could make a great future partner for Smartlands, supplying assets and helping us fund the right project through our unique approach to crowdfunding investments. Conservatively, if collaboration schemes with these companies are established, we estimate the combined pipeline of co-investments and various projects of different scale at £100 million.
Alliance Investments deserves a special mention here because of the size, scale, geography and, most importantly, diversity of their investment portfolio, which includes residential properties, offices, industrial, retail, leisure, and student accommodation developments throughout the UK’s cities and regions.
Alex Thomas of Alliance Investments and our own Arnoldas Nauseda were keen to discuss Alliance’s six already built and rented student apartment complexes and one ongoing project in terms of tokenisation opportunities. Alliance is excellent at adding value to properties through development, refurbishment, and rigorous asset management strategies, at which point Smartlands would enter the investment arena with its technological expertise and the ability to place tokenised shares on the secondary market to achieve ultimate liquidity for investors. Everybody wins!
Well, there will be some losers. The more energetic speakers at the Show made us feel like we were watching “Used cars,” only this time around Rudy Russo went completely bonkers (the image of people calmly taking notes while some lunatic yells at them from the stage and throws paperbacks into the crowd will haunt us forever). Other than that, Property Investor Show 2019 is going to make a valuable chapter in the Smartlands saga. The most important takeaway is that crowdfunding investment on blockchain is gaining momentum in the industry. We are closely watched, followed, scrutinised. In the world where investing is turned into a social activity, the underlying technology will have an impact on our lives whether we like it or not.
We do. Fintech is disrupting traditional processes the world over and turns investing in the real estate into an adventure. From the beginning of Smartlands, we strived to use the latest technological achievements for connecting real economy with real people providing them with opportunities to make the best choices with their hard earned money. And the way the industry professionals complement our innovative technology, the speed, security, and complete transparency of our solution, the way the topic and tone of a discussion changes immediately once the subject of blockchain is introduced to the conversation, the attitude towards our business model – all points at the undisputed fact that we are doing everything right.