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Globally, investor activity is increasing, and macroeconomic activity is starting to grow again. More importantly still, real estate investments are on the rise, and senior figures from across the industry are confident that volumes will continue to pick up in the upcoming months. The good news is that there are funds on the sideline, and the growth is steady, therefore Bulkestate feels confident that real-estate crowdfunding as an industry will rack up record-breaking investments soon enough.

Real estate remains a smart and stable investment to earn a passive income and build financial wellbeing. Moreover, real estate crowdfunding can turn out into a reliable source of income over time with a consistent and logic-based approach. 

If you compare P2P lending with the stock market, it is less volatile and isn’t affected by that many different factors, which is different for stocks. While the stocks can rise more than 30% in a month, plenty can happen over the next month, and the following drop has the potential to collapse the market altogether. Historically an annual return in the stock market is between 7% and 10%, however it can be easily affected by many circumstances, while real estate related investments are more steady and with growth increasing steadily.  

Today, with the stock market more volatile than ever, real-estate crowdfunding and group buying is an excellent alternative investment opportunity to diversify your portfolio and provide a reliable hedge against inflation. Besides, many believe that particularly real estate investment is one of the safest options due to the loan-to-value (LTV). However, one cannot forget about the risks that exist in the field of real estate crowdfunding. For example, the Covid-19 pandemic showed that real estate can have a liquidity problem, especially in certain segments.

Have you ever thought of investing? 

Igors Puntuss, a CEO and co-founder at Bulkestate, emphasized that, “With more and more fintech and investment opportunities emerging, both the younger generation and the wider public have become more educated and comfortable with investing. It is no longer something that only high net worth investors are taking up. Investing has become more simple and available for everyone who is looking to kickstart their financial future.” Igors-Puntuss-Real-Estate-Investment-Bulkestate-en.png

The increase in people's knowledge of investment strategies is rising steadily and many are already tapping into the benefits of crowdfunding and collecting profit from smart and secure investments.

Real estate crowdfunding is a great investment option for beginners or for those who are looking for a simple and less hands-on approach. It is faster and less time-consuming in comparison to the stock market that requires specific knowledge and in-depth analysis daily which might exhaust eventually. When it comes to crowdfunding, you just need to follow through with the due diligence process before investing in the project, meaning less time and efforts from the investor side. 

Besides, it is so much easier to start investing when you select crowdfunding platforms that have proven to be reliable and trustworthy. Because it means that your funds are invested in projects that are prepared and overviewed by a team of experts. In this respect, Bulkestate  carries out a detailed due diligence process to limit the risks to the maximum when developing real estate projects. 

New Tendencies and Regulations

Despite the rollercoaster of economic uncertainty and the first wave of the pandemic, real estate transaction number in all three Baltic countries increased at the end of 2020 (Swedbank Latvia, 2021). The increased appetite for real estate investment was cited as one of the reasons why transaction numbers rose. 

The Baltics remain the major market of Bulkestate, and we see that the demand for housing remains high because the region lacks both new, high-end living space and commercial space. In return, the increasing demand ensures a positive development in real estate. The industry is becoming more and more friendly, and an extra boost provides profitable opportunities for both the real estate developers as well as the investors.

From a legal point of view, there have been some positive changes too. The government of Latvia in the spring of 2021 adopted a new residential rental law. It aims to ensure equal obligations and rights for tenants and renters and provide simplified procedures for registration of rental agreements in the Land Registry. The new law protects both tenants and real estate acquirers, and rental agreements will no longer be allowed to be signed for an indefinite period of time. 

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With the new law in place, experts believe that the industry will have favourable conditions that will ultimately lead to the influx of investment funds and accelerate real estate growth even further.

"Even before the adoption of the new residential law, we observed an increased customer interest in renting properties and diversifying real estate portfolios. This served as a sign for us internally that there will be a positive change and new developments in rental property development are expected,” Kristaps Jankovskis, Chairman of the Board at Kivi Real Estate said.

Economic Snapshot

As we all know, GDP growth is one of the main drivers in real estate pricing, and real estate investment directly influences economic growth. In Q4 2020, investments already reached pre-crisis heights. The only contribution lagging was private consumption. If we compare industries, real estate was one of the industries that experienced the strongest growth in Q4 2020 (Swedbank, 2021).

According to the Bank of Latvia (2021), GDP in 2020 fell by 3.6%. The Bank (2021) projects a GDP increase of 3.3% this year. Even though the current situation continues to be uncertain, the economy in the Baltics and Europe has started to emerge from hibernation. It is expected that the GDP growth will remain solid and the economy worldwide will recover most of the ground in 2022 because of an increase in private consumption and investment. 

2021 will have an impressive growth uplift. The International Monetary Fund (2021) expects the global economy will grow by 6% in 2021, up from a 5.5% forecast in January. Meanwhile, GDP growth in the Eurozone is projected to reach 4.2% (European Commission, 2021). Nevertheless, we may expect a different pace of recovery between the member states because there are economies more export-oriented and there are countries that mainly rely on tourism and hospitality. 

Inflation 

In Latvia, an increase in the average price of services has slowed down and the average price of goods has decreased because of the lack of demand and the pandemic. To keep pace with inflation in the downswing phase, it is good timing to invest in your future and grow your wealth. With the current inflation rates, savings feel the pain of negative rates and ultimately lose value, therefore it is worth considering alternative investment options. 

Low inflation has underpinned the world economy. However, the global surge is likely to change the inflation rates. With economic growth and demand recovering across the world, prices will be on the rise. It is projected that global consumer price inflation will rise at a moderate pace up from 2.1% in 2020 to 2.8% in 2021 (IHS Markit, 2021). Also, the Bank of Latvia (2021) has recently revised the inflation forecast, e.g., 1.8% and 2.2% in 2021 and 2022 respectively, compared to the December forecasts of 1.1% and 1.6% respectively. 

Passive Investment

Financial independence and retiring early is the goal of many highly driven individuals. The FIRE movement and passive income, in general, go hand in hand with the current changes in the labour market and the possibility to work from anywhere. The movement also promotes real estate crowdfunding that can efficiently increase your income. 

Overall, statistics show that people in the Baltics opt to put their savings in current accounts (CBL Asset Management, 2021), instead of earning interest and managing a handful of assets. During the pandemic, the level of household savings, which has been quite low in Latvia, has increased significantly and reached 12 billion euros.

Considering all different passive investment strategies, crowdfunding projects are one of the most stable options to opt for. Generating passive income with real estate crowdfunding is quite simple and your investment strategy is scalable. Bulkestate offers a high average interest rate of 14% and the platform is available for everyone, addressing the needs of a wide range of investors. 

The company has chosen to provide fewer investment projects monthly, yet the return rates outweigh the number of projects. With a well-established real estate portfolio, the expert team at Bulkestate ensures stability and good growth of returns. While Bulkestate mainly focuses on real estate crowdfunding projects, group-buying deals, a quite a unique property selling-purchasing solution, is also on the offer. Group-buying deals mean that an owner can sell the entire property at once, yet buyers purchase separate apartments instead of the entire building.

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Passive investing has never been that simple as it is these days in terms of both the investing process and the availability of alternative ways of making a profit. However, any investor, both new and old, must evaluate their investment opportunities and find the most suitable option, as well as remember about diversification. Nowadays, there are a wide variety of investment opportunities, so it is important to set clear goals and understand your risk appetite, whether higher-risk or more conservative investments such as real estate crowdfunding are appropriate for you.

“With today's ever-changing economic landscape, real estate crowdfunding is a simple and transparent way of earning a return and securing your future. Whether you have a newbie or a relatively experienced investor, real estate crowdfunding will be a good fit to secure your financial future and build up your investment portfolio,” Igors Puntuss, a CEO and co-founder at Bulkestate, concluded. 

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Bulkestate is a member of the German-Baltic chamber of commerce and the European Crowdfunding Network