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Peer2Peer Finance News | November 21, 2017

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A cut above

A cut above
Partnership

Uma Rajah, co-founder and chief executive of online property finance marketplace CapitalRise, explains the importance of quality when considering real estate investments

“It might sound cliché, but the number one thing you have to look at with property is location, location, location,” affirms Uma Rajah, co-founder and chief executive of online property finance marketplace CapitalRise.

With members having access to investment opportunities in prestigious London addresses such as Eaton Square, Grosvenor Square and Yeoman’s Row, this is clearly a rule that CapitalRise lives by.

“Our members benefit from the select and impressive calibre of properties we offer,” says Rajah. “We only consider prime and super-prime locations and our expert team conducts stringent due diligence on every project.”

As well as feeling assured of the quality of the properties, investors can feel confident in the experience of the team.

Two of the co-founders – Alex Michelin and Andrew Dunn – are veteran property professionals who also founded the successful luxury property firm Finchatton in 2001 and have a billion dollars’ worth
of projects under their belt.

Rajah, who has a strong background in fintech and engineering, was brought in by Michelin and Dunn in December 2015 to launch the CapitalRise platform, as “they had an incredibly deep property knowledge but wanted a fintech expert to help bring their ideas to fruition,” she explains.

With the team in place, CapitalRise has set about connecting institutional and individual investors with what it describes as institutional-grade property.

To date CapitalRise has funded projects with a total gross development value of £160m, and this is expected to continue to rise rapidly over the next twelve months. Loan-to-value ratios on developments have so far fallen in the conservative range of 61 per cent to 67 per cent.

The proposition for investors is incredibly appealing, particularly in an era of historically low interest rates. They do not have to pay any fees and investors are currently earning returns between 10 and 11.5 per cent per year, with loan terms typically one-and-a-half years long.

“Demand on the investor side has been really amazing with very little marketing – it’s mostly been through referrals and word of mouth,” says Rajah.

“We believe this is due to the unique calibre of our investments, coupled with the attractive risk adjusted returns. We have a priority list of individuals and organisations who have pre-registered with us so they can be first to hear about our next opportunity.”

Furthermore, investors can benefit from tax-free earnings as CapitalRise launched its Innovative Finance ISA (IFISA) in March.

“If you’re offering the sort of returns we are, as well as being able to offer them tax free, that makes
them incredibly attractive,” Rajah explains.

“An added benefit of our IFISA is that our investments are asset backed. Having worked in the unsecured consumer and small business lending space, I think what makes property investment platforms particularly appealing is that the investment is secured against a physical asset.”

Unsurprisingly, CapitalRise’s IFISA has seen strong uptake so far. 65 per cent of its investors were using the tax-free wrapper on the platform’s last project, with a third of those using CapitalRise’s transfer-in facility that takes the hassle of administration away from investors.

“The IFISA has been incredibly popular, bearing in mind that public awareness of the product is still relatively low,” comments Rajah.

“We’ve had so many people transferring in cash ISAs or stocks and shares ISAs where they were getting mid-single-digit returns at most, who are now getting 10 per cent returns or more tax-free.”

With enviably high returns on enviably prestigious properties, investor interest in CapitalRise looks set to continue.

“There’s a huge opportunity here for alternative lenders and a great appeal for investors looking for yield,” adds Rajah. “It’s an enticing proposition for many people.”

Read more about the CapitalRise Innovative Finance ISA here.