The Crowdfunding for the Sustainability of Real Estate Investments

Currently, the economic landscape is in a state of rapid transformation. The millennium development phase was succeeded by a global financial crisis that radically altered the operational paradigms of all financial sector participants. As a result of this economic crisis, trust in traditional financial institutions, has suffered persistent erosion. The banking system has encountered escalating challenges in providing loans to Small and Medium Enterprises (SMEs). This is attributable to the existence of non-performing loans that are no longer tenable on the banks’ balance sheets, as well as more stringent rules on capital requirements, such as those outlined in the Basel III Agreement. The so-called credit crunch created the need for companies to seek alternative forms of financing beyond traditional banking channels. At the same time, the pervasive impact of the Internet and information technologies has opened up new avenues. Taking advantage of this conjuncture, the proliferation of alternative financial sources, exemplified by crowdfunding, has become particularly important. The potential of crowdfunding for real estate projects has recently been revealed, and has been successful in meeting investors’ needs, providing them with acceptable returns and creating opportunities for diversification through real estate investments. Accordingly, the application of this tool in a real estate transaction to be conducted in a city in the South of Italy is illustrated, highlighting its potential and limitations.