Property Partner have broken the UK record for a property crowdfund with their latest student property development. The development: 65 student blocks in Newcastle is expected to yield 6.13% after all costs and fees. To put the size of this deal into context, I took data from their latest open house (September 2017).
I used the ‘date on resale market’ as to plot over time, which would lag the funding date perhaps by a month or two. Although not in the open house data, I’ve manually added the latest deal in red:
Looking at the chart above, it is clear to see an upward trend in deal size right up to the Brexit vote (June 2016), a more stable period until this September and now this £3million deal. There was another recent £1.13 million student accommodation development which also hasn’t showed up in the latest open house data.
Why was it so popular?
My thoughts are:
- It was a high dividend yield property with 2 year track record
- As an outsider looking in, Property Partner seem to be targeting more and more high wealth individuals who have more to invest in a single deal. An example of this is the refer a friend scheme now based on £10,000 minimum investment (as opposed to £1,000 or £2,000 in the past).
- The popularity of PBSA (Purpose Built Student Investment) in the search for investment yield
- A sense of scarcity created from good sales technique from (e.g. emails offering guaranteed investment in an ‘advance pre-order’ to the ‘pre-order’)
- Growing trust in Property Partner platform
How does it compare?
In terms of pure equity property crowdfunding (not lending) it appears to be far ahead of other UK competitors. Property Moose raised about £600,000 for a South Yorkshire student accommodation portfolio in the second half of 2016.
The total purchase price was actually £5.36 million, but mortgaged to increase leverage.