Luxembourg taps crowdlending to raise more real estate capital

Four residential properties planned a shade under twenty minutes’ drive north of Luxembourg are the latest in a number of Luxembourg real estate projects to raise raising capital for land purchase through crowdlending as banks dial back from lending.

Luxembourg-based property developer Qubic Group is raising €1.35m through Belgium-based real estate crowdfunder BeeBonds for the construction of four semi-detached three-bedroom houses in the quiet village of Lintgen, situated near Mersch just north of Luxembourg.

They join three residences in Kirchberg, seven apartments in Leudelange, a creche and two houses in the city which have all turned to the lucrative crowdlending market to finance project construction and land purchase in recent years. All in all, Founder and CEO of BeeBonds Joel Duysan estimates that 10% of BeeBonds projects are situated in Luxembourg.

“There’s huge demand in Luxembourg to raise money in real estate because the banks can only lend as far as the ‘prix solde’ meaning that you can only receive that bank money when you’ve sold 70% of the promotion,” he said.

The early upfront capital used to come from investors, friends and family. However crowdlending has now entered that mix. In exchange for the lock up of their capital for two years, investors will receive gross interest of 9% per annum on their capital for the Lintgen project, Duysan said.

And, at a minimum investment of €500, it’s also valuable exposure for retail investors into the Luxembourg real estate market.

“Investors can invest in real estate in the Luxembourg country. The risk for investor is less than in Belgium [because all of Luxembourg real estate projects tend to get sold]”, said Duysan.

“In this time of high inflation and uncertainty, BeeBonds allows investers both a good return and flexibility – the lock-up is for two years only.”

The targeted €1.35m is accompanied by a bank financing from Raiffeisen and a loan from the project’s shareholders. Investors can be based anywhere in the European Economic Area and hold a personal or corporate account.