Millennials are investing in property crowdfunding as a way of getting their foot on the home ownership ladder.
That’s according to research by Shojin Property Partners which has noticed a 20% increase in people aged 18 to 30 investing in crowdfunding projects.
It has attributed this to a combination of low interest rates making saving unattractive and high property prices pushing homeownership into unobtainable territory for the generation.
Shojin revealed millennials now accounted for almost a fifth of people who were investing in property via its platform, suggesting this age group was looking for more innovative ways to invest their cash.
Crowdfunding is where businesses or projects raise money by inviting a large number of people to make small investments. The process is usually carried out online.
Shojin’s latest product, for example, is a buy-to-let offering which enables landlords and investors to come together and buy into a small portfolio of residential property for rental purposes and share income and capital growth.
Investors are offered income, plus a share in profits when the property is sold for a blended return for 5% to 10% per year over five years, according to Shojin.
It said its largest group of investors were aged 30 to 39, followed by the 40 to 49 years and that after this age interest tended to decline.
However, for millennials it was becoming more attractive because it enabled them to invest in property with a low amount of money without the need for large savings or deposits.
Jatin Ondhia, CEO of Shojin Property Partners said: “With interest rates so low, millennials are losing money, keeping it in a bank due to the rate of inflation.
“This, combined with out-of-reach property prices, is driving an increase in 18 to 30 year olds investing property crowdfunding.
“This age group will increasingly embrace crowdfunding, as they are early adopters of new and emerging technologies and are keen to try innovative ways to invest.
“Being able to invest smaller sums of money is also very attractive to millennials, enabling them to dip in and out of property.
“They have potentially large investing power and crowdfunding offers them an opportunity to spread risk.”
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