Crowdlending for real estate projects: Why Europe is behind the USA – And why that will change

In the United States, crowdlending for real estate projects has been a well-established, multi-billion-dollar industry for years, whereas Europe is still in an early growth phase. ‍

Why is the U.S. ahead, and what needs to happen for Europe to catch up?

At Crowdster, we see massive growth potential in the European market — but there is still a long way to go. The U.S.: A mature and well-developed crowdlending market. The U.S. has been a pioneer in crowdlending, particularly for real estate financing. As early as 2012, the JOBS Act was passed, adjusting regulations to allow smaller investors to participate in real estate projects through digital platforms. This triggered explosive growth, with market leaders such as Fundrise, RealtyMogul, and CrowdStreet quickly becoming billion-dollar companies.

Some of the key reasons why the U.S. is so far ahead include:

• Flexible regulations and clear frameworks: The JOBS Act created an environment where crowdlending platforms can easily operate and attract capital.
  ‍
• A large investor base: The U.S. has a strong investment culture focused on alternative investments, including real estate crowdlending.
  ‍
• Faster adoption of digital financing: Online investing is fully integrated into U.S. capital markets, whereas Europe remains more conservative.
  ‍
• Capital availability: The U.S. market is significantly larger and has a higher risk appetite among investors.

Europe: A market in early development

‍In Europe, crowdlending for real estate projects is still a relatively new and growing sector. Platforms such as EstateGuru, Crowdestate, and Crowdster have seen strong growth, but compared to the U.S., the European market is still much smaller and more fragmented.

Some of the biggest challenges for Europe include:

• Complex regulations across different countries: Each country has had its own rules, making it difficult for crowdlending platforms to operate across borders.
  ‍
• Lower investor awareness: Many European investors remain skeptical about crowdlending, whereas U.S. investors consider it a natural part of their portfolio.
  ‍
• Dominance of traditional banks: Banks still play a major role in real estate financing in Europe, whereas the U.S. has seen a more diversified financing landscape.

What Needs to Happen for Europe to Catch Up?‍

Although Europe is behind, the opportunities for growth are massive. The market is still in its early stages, and several key factors will drive future development:

‍1. The EU’s New Regulations Will Create a Unified Market
In 2020, the EU introduced Regulation (EU) 2020/1503, establishing common rules for crowdlending platforms across Europe. This will eliminate many of the barriers that have hindered growth and make it easier for platforms to operate across borders.

‍2. Increased Investor Interest in Alternative Investments
Both private and institutional investors in Europe are increasingly seeking alternative investments to generate higher returns in a low-interest environment. This creates a perfect growth opportunity for real estate crowdlending.‍

3. Technology and Digitalization Will Accelerate Growth
With fintech platforms, blockchain, and increased digitalization, it is becoming easier, faster, and safer to invest in real estate projects through crowdlending. This will attract more investors and developers.‍

4. Stricter Bank Lending Will Push Developers Towards Crowdlending
European banks are becoming more cautious about lending to real estate developers, creating a greater need for alternative financing methods. Crowdlending can fill this gap.‍

Europe Still Has Enormous Growth Potential

While the U.S. has led the way in real estate crowdlending, Europe has huge untapped potential. With the right regulations, technological advancements, and a growing investment culture, we at Crowdster believe that Europe will catch up to the U.S. within the next decade.Crowdlending is no longer just an alternative — it is a disruptive force that will reshape the way real estate projects are financed in Europe. And this transformation has only just begun.