Crowdfunding Changes the Form of Investing in Real Estate in Brazil

RIO DE JANEIRO, BRAZIL – Anyone can invest in a real estate venture over the internet by purchasing a fractional share through online platforms specializing in real estate crowdfunding. The aim is to fund the company that will execute the construction project. In exchange, those who participated in the collective financing receive profits at the time of sale, proportionally to the amount they invested.

The system is still new in Brazil but has already been used for some years in other countries, such as the United States. In 2017, the sector generated more than US$34 billion (R$136 billion) worldwide. By purchasing a share, the investor buys the right to a share in the General Sales Value (PSV) of the development.

Francisco Perez, head of investments at Glebba Investimentos, a real estate crowdfunding platform, says there are projects with a minimum investment of R$5,000, which favors greater involvement. Glebba started the system in July 2018, focused on vacant lots, and has already raised around R$1.8 million. The company plans to close 2019 achieving R$25 million.

“We have connected real estate ventures to an investor pool, scattered through this digital platform. In a fast, non-bureaucratic way, within the shared economy model, we made that connection,” he explains.

Perez details that the company works with real estate developers and plotters to first perform the legal, market, and financial assessment of the venture, to determine if it meets the necessary requirements to participate. If approved, it is published on the website as a public offer, available to those who are registered on the platform.

“It’s all online; all information is provided so people can make the investment decision. The minimum amount depends on each offer, and the profitability depends on the development,” he says.