The Czech Republic, like many other countries, is struggling with a housing crisis characterised by soaring prices and a lack of affordable housing. In the midst of these problems, however, a promising solution has emerged in the form of real estate crowdfunding. This innovative approach not only offers an alternative financing method, but also has the potential to revitalise local communities and address the country’s pressing housing needs.
The housing crisis in the Czech Republic
In recent years, the Czech Republic has faced a significant housing crisis caused by a combination of factors. Rapid urbanisation, limited supply and growing demand for housing in large cities such as Prague and Brno, or the Central and South Bohemia regions, have caused a severe shortage of affordable housing. This has led to a sharp rise in house prices and has placed a disproportionate burden on low-income individuals and families. Although markets in these locations have cooled somewhat as the government tries to curb the sharp rise in prices, home ownership remains unaffordable for a significant part of the population – due to the small size of urban centres combined with the persistent demand for housing. It’s no wonder, then, that words like “real estate agent” or “investor” evoke venom in many people trying to hold on to the places they call home.
The traditional financing challenge
In the past, developers have relied on traditional financing methods such as bank loans to finance real estate projects. However, strict lending criteria, high interest rates and limited availability of credit have hindered the development of affordable housing options. As a result, many projects were suspended or abandoned, exacerbating the housing crisis.
“A healthy housing market need not lead to widening wealth gaps. The key lies in using technology to democratise ownership so that everyone can reap the financial rewards that property owners or large real estate investors enjoy. In doing so, it is possible to adopt a new investment paradigm – one that allows ethical investors to decide what kind of property, and therefore what communities of cities and towns, will help raise their money,” says Jan Večerka, founder and CEO of BrikkApp, a crowdfunding platform that facilitates collective real estate investing in various European countries.
Modernising the buying process
The buying process can be modernised by removing the middleman and using technology to facilitate direct interaction between buyers and sellers. Platforms like Lyft and Airbnb have shown the benefits of cutting out the middleman and using scalable technology. This approach reduces costs for end users and encourages more personal transactions. Real estate may undergo a similar transformation. Real estate agent commissions can significantly inflate home prices, especially in emerging markets. Other costs, such as lawyers’ and administration fees, also drive up prices. However, advances in artificial intelligence offer alternatives to real estate agents, brokers and lawyers. Smart contracts enable transparent and trustworthy transactions without the involvement of third parties. Like other legacy platforms swapped for online counterparts, real estate is poised for simplification. This solution is already easily achievable today.
Making investing accessible to all
We can use the same technology to create an inclusive environment where anyone can get involved in real estate investing. The real estate boom in major cities has highlighted the perception that only the wealthy can benefit from investing in highly desirable assets. The revolution in real estate investing is being spearheaded by online platforms that are introducing crowd-sourcing methods, allowing individuals of average or modest means to participate. This breakthrough opens the door to a market that was previously dominated by an exclusive circle of wealthy investors.
Real estate crowdfunding and revitalisation potential
Real estate crowdfunding represents a compelling solution to the financial challenges facing developers in the Czech Republic. By harnessing the power of the crowd, this model allows individuals to collectively invest smaller amounts of money, thereby democratising real estate investment.
“Crowdfunding platforms provide a digital marketplace where developers can showcase their projects, attract investors and raise funds. By engaging diverse investors, including local residents, real estate crowdfunding promotes a sense of ownership and public engagement. This approach not only brings together people with a common interest in revitalizing their neighborhood, but also ensures that the needs and preferences of the community are considered in the development process,” says Jan Večerka, founder and CEO of BrikkApp.
But is more investment really the solution?
While it is true that increased investment alone may not solve the problems facing the housing market, it is important to consider the potential benefits of redesigning the system. Indeed, speculation has contributed to unsustainable increases in property prices, making home ownership unaffordable for average individuals. However, by redesigning the system, we can aim to bring house prices back to a more reasonable level. The reality is that property will always be an attractive investment because of its potential for significant returns. Development opportunities will continue to attract investors. By opening up the market to ordinary people, we can ensure that these opportunities are no longer exclusive to the privileged few.
By harnessing technology and innovation, we can work to create a fairer environment for property investment and reclaim our cities. We are witnessing the transformative power of new technologies that are reshaping and democratising industries ranging from ride-sharing to fundraising. Property ownership is now poised for change, and property crowdfunding platforms can finally make that change happen.
Source: Kasper PR
