Real estate was the most popular sector for online alternative finance investments and loans in 2014/2015, with the combined debt and equity-based funding for the sector reaching £700m.
In 2015, peer-to-peer business lending for real estate grew to £609m, which amounts to 41% of the total volume of peer-to-peer business loans. On a quarterly basis, this market segment increased from £120.78m in Q1 to £188.12m in Q4.
The data was released in a joint report published today by the Cambridge Centre for Alternative Finance at the University of Cambridge and UK innovation foundation Nesta, in partnership with KPMG and with the support of CME Group Foundation.
Peer-to-peer real estate lending financed over 600 commercial and residential developments in the UK in 2015, mostly by small to medium sized property developers, while peer-to-peer business lending for real estate accepted an average of 27.5% of loan applications. The average size of peer-to-peer loans for real estate was £522,333 in 2015, slightly less than the £662,425 reported in 2014.
Andy Pyle, UK head of real estate at KPMG, said: “Real estate in the UK is attracting strong investor interest across the board, and so perhaps it should come as no surprise that the sector ranks number one in the online alternative finance market. What’s maybe more interesting is how quickly the market is growing, with both peer-to-peer lending and equity-based crowdfunding taking relative leaps in value quarter on quarter in 2015, signalling that this is rapidly growing market set to make further waves in 2016.”
More generally, the UK online alternative finance sector grew by 84% in 2015, facilitating £3.2bn in investments, loans and donations.