Traditional methods of raising capital for real estate development projects involve borrowing from banks and financial institutions, issuing bonds or raising funds from private equity investors. While these methods have been around for a long time and continue to be widely used, they often need more access to capital, high fees and interest rates.
Alternative financing options have gained popularity in the real estate industry for several reasons. In recent years, technology has facilitated the rise of alternative financing platforms, making it easier and more efficient to access capital for real estate development projects. From crowdfunding platforms to blockchain technology, technology has enabled developers to reach a larger pool of investors, eliminating the traditional barriers to accessing capital in the past.
Non-bank lenders will continue to take more market share over the next five years. This has grown from 1% pre-GFC to 10% today. With much more growth potential for non-bank lenders and more diversification in the real estate lending market, it indicates things to come. It is continuing a growing diversification over the next five to 10 years.
This was further expanded in an article published in REACT news on 28th March 2023 by Starwood Capital’s – Lorain Egan, where he headlined, “The climate is perfect for a non-bank lender”. He said, “We think non-bank lenders will continue to take more market share over the next five years. The current inflationary environment and interest rate environment is an opportunity for non-bank lenders.”
What does this mean for an evolving technology community in the real estate marketplace?
The evolution of non-lender finance in real estate presents challenges and opportunities for the PropTech community. While it may disrupt traditional lending models, it could also create innovations. It considers current oversights in frameworks, processes and risk management associated with The Silicon Valley Bank and the global knock-on effects for investors and financial institutions.
Given the current groundswell in multiple software solutions in a rapidly digitising industry, we must also be aware. Organisations may also create a vast Tech stack to provide the company solutions. This could create a bird’s nest of tools, applications and solutions and drive complexity in reporting or management processes. This could also be damaging if not managed correctly.
How does fu3e. help you manage, mitigate and report?
Firstly, fu3e. is no stranger to non-bank lender frameworks. Industry experts created it with first-hand experience with this methodology and more traditional routes. Frustrated by unimaginable complexities surrounding conventional and alternative methods and the (in some cases) catastrophic reporting functions to which managing risk, cost, programme, compliance and regulation was pivotal in a volatile market. fu3e. set out to create a platform that clarifies the chaos and complexity in the real estate development ecosystem.
The fu3e. platform breaks down into solutions to support funds, developers, owners and consultants By automating routine tasks, improving efficiency, and reducing risk in its many forms in the real estate lifecycle.
fu3e. for funds, developers, owners and consultants
fu3e. is a solution that provides a framework to integrate with your existing processes by enhancing the way you manage risk by automating the collection and analysis of data by leveraging the software.
You can:
- Risk – You can quickly analyse large amounts of data and identify patterns that may indicate risk.
- Automation – so that you can free up staff time and reduce the potential for errors.
- Portfolio Management – manage portfolios effectively to ensure they generate the expected returns while managing risk.
- Compliance (incl ESG) – you are subject to a variety of regulations and compliance requirements. fu3e., can be used to track and manage compliance tasks, such as generating reports and submitting regulatory filings.
Customer Management – we provide a centralised platform for communication and information sharing, both for internal and external stakeholders giving direct, timely and accurate comms and enhancing transparency.
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