REIT ASIAPAC
At Minterest , being an intermediary , we believe that reputation and reliability are critical . Hence , it is important that our platform provides confidence to both the borrowers and investors . From the borrowers ’ point of view , there is the availability of investment liquidity for their business funding needs and from the investor ’ s position , there are quality offerings that would meet their return requirements .
Q
How does Asia Pacific ’ s crowdfunding sector compare with those in the US and Europe ?
Charis : Global Alternative Financing has seen massive growth : the sector has grown from infancy in 2005 to US $ 11 billion in 2013 to US $ 305 billion in 2018 .
In the US , the market is mostly dominated by consumer credit platforms ( 57 % of the US market share – mostly student loans / credit card loans ), with an emphasis on institutional investments and emerging securitisation models . In 2017 , 88 % of the market volume was funded through institutional investors or a total of US $ 37.6 billion . This is due to the relative maturity of the US market , where platforms can provide higher levels of product diversification .
Asia Pacific has a significant market share , given that China alone accounted for 71 % of 2018 global volumes . Excluding China , Asia Pacific accounted for 2 % of the market ( US $ 6.1 billion ), as compared to US which accounted for 20 % ( US $ 61 billion ) and Europe ( including the UK ) which had a 6 % market share ( US $ 18.3 billion ). Within the crowdfunding sector , there are numerous subsectors which include consumer lending , business lending , real estate crowdfunding , equity crowdfunding , and non-investment activities such as reward crowdfunding .
In Europe , there is also a strong focus on consumer credit platforms , although , in the UK , marketplace business lending is the dominant model , closely followed by consumer lending .
In Asia Pacific ( excluding China ), marketplace business lending is the dominant model closely followed by consumer lending . Established markets such as Australia and Japan have business lending transaction volumes above US $ 1 billion in 2018 , along with Indonesia , which has a large consumer credit market . In the Asia-Pacific region ( excluding China ) as a whole , most investor activities were driven by individual investors rather than institutional investors .
From a real estate marketplace lending perspective , Asia Pacific ( including China ) has the largest market share at 44 % with a volume of US $ 2.5 billion in 2018 . Europe follows with US $ 1.9 billion ( 33 % global market share ) and the US with US $ 655 million ( 11 %).
However , equity-based crowdfunding for real estate is gaining momentum . The US is leading the market with a share of 60 % and transacted volumes of US $ 1.8 billion in 2018 . Europe has US $ 865 million and APAC at US $ 258 million . Given that the real estate component of crowdfunding is still relatively small , there is potential for growth .
Q
What are your thoughts about the future of the crowdfunding sector in real estate ? What are the implications of crowdfunding on the traditional means of owning real estate ( i . e ., acquiring physical property and investing in REITs )?
Charis : The global real estate market makes up more than half the value of all mainstream assets in the world , but it is extremely illiquid . We need to go beyond our mindset that we need to own real estate traditionally , i . e . buy a physical property and hold it for many years for capital appreciation . It may not be possible , given ownership restrictions , the huge quantum of investment required , property maintenance expertise , etc .
With advancements in technology and legal developments , real estate crowdfunding is increasingly popular with developers and investors , and it is redefining the way commercial real estate assets are bought , managed and sold today .
Many financial institutions , regulators and even governments are looking at related blockchain technologies . With that , we can create an active secondary market for the trading of real estate and open up new pools of liquidity for all . Being a forward-looking real estate investment company , we have a view of the future , that is , creating a blockchain token to represent a real estate asset will enable a new species of crowdfunding . A digitalised asset can be much more liquid , transparent , and secure than the existing paper-based asset infrastructure .
Q
What role does the acquisition of a majority stake in Minterest play in ARA ’ s broader ambition in the global real estate credit business ? What can we expect from Minterest in the foreseeable future ?
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