LFP078 – Special Episode! 30,000 Feet Guide to UK Property Investment in the Fintech Age with Alex Michelin, founder CapitalRise

We all know that buying a property in the UK is a nightmare, that property prices are through the roof, that a first time buyer in London has an average age of 39 and that the “Bank of Mum and Dad” now has to contribute to around a third of first time purchases. Yet most folks in the UK are owner-occupiers and have to go through this.

How can Fintech help?

I’m delighted to be joined today by Alex Michelin, a former investment banker turned highly successful property developer, who not only has been immersed in this for over 15yrs but who recently founded CapitalRise a Fintech property portal. The team of eight at CapitalRise has over 75yrs of direct retail investment experience between them and the co-founders Alex and Andrew Dunn, who have acquired, developed and sold over £1bn of real estate. CapitalRise has been spun out of the highly successful top-of-the-market luxury property developers Finchatton.

Given the “challenges” (<coughs>) of the UK property market how can Fintech help? Before we get to that Alex sets the scene with an overview of all the many ways one can get exposure to UK property. So by the time we get to Fintech y’all should have a good idea of where it fits in, what it disrupts and its potential relevance to you.

Topics discussed include: 

  • Alex’s career journey and experiences in property development – having now done over £1bn of property development and having £1bn to sell
  • the genesis of CapitalRise
  • the “very real”, very tangible nature of property development compared to much of FS or consultancy
  • “something that attracted me to property development is that we build homes”
  • What Is Property?
    • Many sub-sectors and the performance of these varies
      • Residential
        • home one lives in
        • buy-to-let
      • Commercial
        • offices
        • “sheds”
        • retail
        • hotels
        • etc
      • NB regional aspect
    • residential has outperformed most asset classes over time (housing shortage, a problem the UK has never solved)
    • residential has outperformed commercial which tends much more to go up and down with economic cycles
    • pro-cyclical development behaviour in commercial property
    • the impact of the internet on commercial property
  • Why Invest In Property?
    • to live in it 🙂 (and not “waste” money on rent)
    • as an asset in its own right
    • to save for your deposit for your first property in a “matched” way
    • will Brexit impact the property trend? Or are economics/interest rates a bigger threat
  • How To Gain Property Exposure?
    • direct purchase
      • own home
      • buy-to-let (NB costs & hassles)
    • Property Funds
    • Property Stocks
    • REITS (real estate investment trusts) – daily liquidity on the market but a whole chain of folks taking fees
    • NB funds/REITS are predominantly commercial property vehicles
    • NB two subcategories of exposure
      • “passive” – asset prices
      • “development” – the uplift in adding value as well as exposure to the underlying market (with of course a higher risk profile)
  • Fintech and Property
    • PropTechs are tech firms that make property more efficient (finding/buying/cleaning et al)
    • PropFinTechs/FinPropTechs (?!) are those firms that enable financial exposure to property be it debt, equity or development
    • they basically enable existing processes with smaller entry amounts (eg £1k) and far lower fees (esp re avoiding long chains of folks taking fees)
    • Property Fintechs fall into broad categories
      • Debt Characteristic – eg LendInvest, Landbay, CapitalRise
      • Asset Exposure (to buy-to-let) – eg CapitalRise, Property Partners
      • Development(/Equity) Exposure (~= Property CrowdFunding) – eg CapitalRise where you are at the end of the chain to get paid (albeit of course with potentially higher returns)
    • NB angle of (real) democratisation of getting exposure to property development – previously accessible only to the 1%
  • CapitalRise is giving folks exposure to very prime central London property, returns expected to be in the 10-18% depending on the risk profile
  • CapitalRise get 10-15x as many proposals than projects they proceed with
  • plans for a secondary market
  • CapitalRise is ISA-able

And much much more 🙂

Share and enjoy!