Mind your Asset Class, by Capital Rise

Thought leadership

Mind your Asset Class, by Capital Rise

Uma Rajah, Co-Founder and CEO of CapitalRise sees fintech as an enabler, but it’s the asset class that counts.

Since the start of COVID-19, the big question for investors has been: Where do we put our money? This period is an important turning point for the relatively new fintech investment market, and this point in history will be seen as a test of its agility and resilience. As a fintech platform, CapitalRise is a technology-driven, fast growing business disrupting the prime property finance market. The fintech investment sector was largely born in the aftermath of the global financial crisis. Real estate finance companies like ourselves aim to provide investors access to prime real estate debt as a key part of their alternative investments portfolio – by filling the funding gap triggered by the retreat of traditional lenders. CapitalRise is solely focused on the attractive UK prime property market which despite its proven resilience as an asset class, is not the focus of most lenders.

Prime property is in the blood of CapitalRise. Behind the platform are experts in their respective fields who are apt at navigating through changeable times. With a team who have experienced years in the prime property finance industry, we have a strong expertise advantage. This is bolstered by our relationship with Finchatton, the luxury interior design company founded by two of the three CapitalRise founders. Finchatton has delivered over 120 projects in prime central London and worldwide, with a value in excess of £2 billion.

 

CapitalRise is solely focused on the attractive UK prime property market which despite its proven resilience as an asset class, is not the focus of most lenders.

 

For investors, COVID has accentuated their appetite. The impact of global economic uncertainty and zero to negative interest rates now mean that sitting on cash is expensive. It has been both a global phenomenon and a great leveler, altering attitudes towards risk appetite and portfolio allocation strategies.

Investment managers are under increased pressure to deploy funds into lower risk asset classes such as private debt, real estate and real assets. Large volumes of institutional investment have been widely publicised over this period, particularly in private debt funding, as investors rebalance their portfolios.

Much of our loan book is in prime central London (PCL), fondly known as the ‘golden postcode’ areas including Mayfair, Chelsea and Belgravia. PCL is totally unique and can’t be compared to the mainstream UK property market, or indeed the rest of the world. Despite the impact of the pandemic on the wider property market, there is a silver lining. Prime property is robust and as a result, prime assets are still in demand from both domestic and global investors. Private secured debt is not correlated to wider market volatility and offers downside protection, especially when asset backed. It’s being increasingly chosen as an attractive investment because it is more liquid than regular real estate and other luxury asset classes.

 

PCL is totally unique and can’t be compared to the mainstream UK property market, or indeed the rest of the world.

 

There is also a larger market audience taking advantage of prime real estate debt that travels beyond domestic investors. Its global attraction sees participants taking advantage of transaction ease, currency differences and strong value proposition when compared to other international property markets.

Ultimately, prime real estate is an appealing investment choice providing attractive risk adjusted returns. At CapitalRise we have seen that despite the pandemic, institutional investor appetite for secured debt has remained strong during this period. Property Funds World recently reported that Non-listed real estate debt products continue to attract attention from institutional investors and investment managers, with a record high of EUR32 billion raised globally in 2019, according to the INREV Debt Vehicles Universe 2020 study.

Now with the ability to carry out investments digitally, It’s the time for fintech investment platforms to shine.

 

Now read: Family Offices: Investing in a post-pandemic world, AYU – The app for the hedge fund world

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