Real estate investments attractive for their stability and as a protection against inflation
Real estate is generally considered to be a stable and safe investment. An internal survey by Crowdberry shows it is a popular investment instrument, sought by more than 50% of its investors. Today, when a complex geopolitical situation is feeding double-digit inflation, the importance of real estate to investors has only grown. In addition, the market is expected to revalue due to these pressures, so for a number of investment opportunities this signifies the right moment before their value rises.
Crowdberry's investment platform allows private investors to co-own businesses and real estate. Since its inception, more than CZK 1 billion has been invested through the platform and the funds it has established. Roughly a quarter has gone into real estate and development projects, and these opportunities are now on the rise. Given the current market situation, the real estate segment is expected to attract more investors. However, real estate rarely offers returns above 10%, which are usually achieved only by developers and large institutional funds.
"Investing in property development makes sense especially in the long term, where value is created over time and such investment acts as an interesting capital preservation. In addition, by entering the project early, the investor gets the opportunity to participate in the returns exceeding the usual rate."
Yet Crowdberry has been changing the culture of investing in Slovakia for more than five years and in the last two years in the Czech Republic, allowing private investors to participate in the profits from the success of companies and development projects. In the case of new construction, it allows investment in land acquisitions or special purpose vehicles during the early stages even before the actual construction begins. "Investing in property development makes sense especially in the long term, where value is created over time and such investment acts as an interesting capital preservation. In addition, by entering the project early, the investor gets the opportunity to participate in the returns exceeding the usual rate," says Crowdberry Investment Manager Jan Rovný.
This is similar to the investments in KLM development projects in which Crowdberry investors have already participated. These include a retail park in Piešt'any, and logistic facilities in Nitra and Trnava.
The construction in Trnava is an example of a project where investors had the opportunity to enter the project at an early stage and share in the proceeds from the development of a fully leased facility with a 10-year contract. The facility has a significant position in the distribution network of the largest parcel delivery company Slovak Parcel Service, which, thanks to a fully automated processing line, can effectively meet the needs of the growing e-commerce market. Moreover, the investment came at an opportune moment when the growth of the e-commerce market accelerated during the Covid-19 pandemic. As a result, the value of the project has also increased since its completion and commissioning. "At the end of 2021, KLM's facility in Trnava has been independently valued 19% higher than the projected sale price," says investment manager Samuel Frankl of Crowdberry.
Besides the industrial sector and retail park, other opportunities have sparked great interest among investors. Crowdberry investors last year took the opportunity to invest in the acquisition of land for an apartment project near Lipno, and have joined the development of Dúbravská oáza, a modern centre for Alzheimer patients in Bratislava. The investors invested almost CZK 100 million in the Bratislava senior home. Today, the facility with more than 160 beds has an occupancy rate of 70%, and this figure continues to rise. More than 70 Czech and Slovak investors entered the Lipno project, investing CZK 46 million as the developer works on the getting the building permit. This is exactly the type of investment that Crowdberry investors are entering at a very early stage.
Currently, Arcona Capital is applying for investment on the platform as it looks to implement the fourth phase of its residential development in Úvaly. Private investors have the opportunity to co-own the project alongside an international fund that manages assets worth almost CZK 10 billion and the Crowdberry-founded real estate fund CB Property Investors, which is entering the investment as the main investor. The development, in a quiet area on the outskirts of Prague, is anticipating a trend where the middle class will continue to move out of the centre of Prague, even in its broader sense.
CB Property Investors creates a mixed portfolio and, in the spirit of Crowdberry's philosophy, offers qualified investors the opportunity to share in the profits as they create value. It recently completed the acquisition of a building in Ivančice, a town near Brno. Having been approved, the building will undergo a fit-out over the summer months and will be commissioned as a new retirement home called Dobré časy¹ at the end of the summer. It will offer a combination of a specialist care home for seniors with Alzheimer's or other mental health issues, and nursing beds for long-term care. There will be a total of 167 beds. Investors will also be able to invest in the Ivančice home during the autumn via the Crowdberry platform.