Invest & Fund Predict P2P Rebirth - Real Estate Investment Evolves
Summary
As the market sees increasing corporate ownership of housing assets, residential development funding platform Invest and Fund has proposed a change in the role of peer-to-peer lending platforms. In a recent blog, the platform predicted a V-shaped recovery in house prices, as rates come under control, with money built up by the wealthiest percentile during the pandemic poised to flood into the housing market.
‘Income inequality in the UK, as measured by the Gini coefficient, increased by 1.3% to 35.7% in the post-pandemic era,’ the blog said. ‘We believe this is a better metric for judging house prices than the availability of affordable retail mortgages.’
Meanwhile, what the blog described as a ‘massive underestimation of the supply shortage’ will underpin prices in real estate. As a result, Invest and Fund foresees a considerable rise of corporate ownership, with housing asset ownership shifting from the middle classes to the corporate sector in the coming decades.
‘The beginnings of this shift are already visible,’ the firm said. ‘This would be a significant change in the dynamics of housing investment, as historically structured products like Real Estate Investment Trusts were intended as a way of aggregating illiquid commercial properties into one investable business. This new way of thinking is on a much bigger scale. Rightly or wrongly, it’s setting out on a road that leads to entire housing markets becoming structured.’
Given this, Invest and Fund believe P2P lending is set to evolve into a structured product that allows investors to gain exposure to property development ‘in the same way significant Wall Street funds expose investors to ownership’.
The platform sees P2P emerging as the accepted way of investing in housing development, attracting major players and significant wealth to the sector. It argues that ‘P2P platforms will be the custodians of this opportunity, just as funds will be the custodians of real estate investment, by virtue of being the best placed and best experienced to pick up the torch.’