Estating is changing the way the property market works. It is combining an innovative financial product with borderless technology to open the market for investment in prime property to a world of untapped demand.
This global digital platform allows investors to make fractionalized investments in prime real estate from their traditional investment account. It offers a new way for investors and financial advisors to diversify portfolios, removing the historical barriers of real estate investment of single unit purchase, legal complexity, high cost and the hassle of managing the asset once purchased. It means a Financial Advisor can use the Estating platform to build their client a portfolio of property in the same way he buys stocks and bonds, buying fractions of the properties that match their clients’ preferences and profiles.
This is a fantastic new opportunity for the wealth management sector. Allow us to explain a little of the detail.
How is Estating different?
Prime residential property is not a new asset class, it is just the access to it forces an investor to make a compromise between choice, control, and cost.
Investors can choose to make direct investments into a countless choice of properties, from many different types, anywhere in the world. An investor has control over choosing what properties suit their needs. But to maintain this choice they must accept the difficulties of local purchase regulations and laws, pay high costs to middlemen, take the responsibility of managing the properties over the long term and, most restrictively, buy in whole units. All of this is fine if you have the size of portfolio that allows a private office infrastructure, but normally it creates too big a barrier.
Alternately an investor can access property assets via a REIT (Real Estate Investment Trust). This removes the hassle, passing the sourcing and management process to the fund manager – but at the high cost of the fund’s charges and the loss of control over which assets are bought. The investor is locked into a one-size-fits-all choice, normally from a single sector, made according to the fixed criteria of the fund.
Estating offers a third way – one that both combines the advantages and removes the restrictions of REITs and Direct Purchase.
Opening the door to real estate investment
The Estating platform offers a selection of carefully selected and vetted prime real estate from the most happening cities in the world. The advisor and their qualified investor get to select the options that best suit their criteria for income, growth, and risk, in fractional units starting from €50,000 or equivalent. When subscribed these properties are bought, securitized, and issued in the form of a note called a RELINC – more formally put this “represents the position of the property owner and provides investors with access to the net monetary flow of the property and capital appreciation”.
This RELINC is created inside the banking system and stored in the property vault located in Luxembourg. This means that the security is protected by the regulations of the financial market – one crucial element being the separation of each property into securities in separate vaults, removing any concern of collateral cross damage.
But the Estating delivery does not stop there. Estating remains a partner in the long-term interest of each building and property taking responsibility for the maintenance and leasing of each property, the collection of rent and distribution of net income, and the maintenance of value. Estating takes an investment in each property transacted on the platform to ensure that it sits in the same boat as its investors, committed to the maintenance of the long-term value and growth of the assets under its management.
So – Estaing increases the choice, spread and flexibility of investing directly while also removing the hassle of ownership without abrogating control to a self-interested REIT manager.
Estating believes that investors should be able to pick a portfolio of prime real estate that matches their needs, in any size, in any country, in any city, as easily as they invest in stocks and bonds and without exiting the financial system. Estating is providing a platform and an infrastructure that allows wealth managers to include the advantages of the property asset into their clients’ portfolios with the exact combination of yield, growth, and risk that they judge right. By using it they will improve their delivery to their clients and earn commissions on both the primary and secondary transaction. This democratizes the property market and creates a win for the investor, a win for the advisor and a win for the property developer.