Need for more scrutiny on real estate crowdfunding

Resolve the real estate inventory and promote sustainable development of the real estate industry – this was first proposed at the Leading Group for Financial and Economic Affairs’ working conference in November 2015. However, according to commercial housing sales from January to November that year, the market is still facing enormous pressure in cutting inventory.

As a supplement to traditional financing, the rise of internet financing has effectively improved the efficiency of the allocation of financial resources. With the ability to raise funds in a short period of time, crowdfunding has become a preferred choice of many developers. The enormous pressure to cut inventory has led developers such as Vanke, Country Garden, Wanda and CITIC Real Estate to collaborate with Pinganfang.com, Tianxiadai, 51wofang.com, zhouchou.com and other crowdfunding platforms to release real estate crowdfunding options.

In 2015, the State Council issued a Guiding Opinion on Accelerating the Construction of Public Entrepreneurship and Innovation Support Platforms. For the first time, crowdfunding was defined as a new channel to expand investment and financing for entrepreneurship and innovation. Through the internet platform, crowdfunding is a more flexible and efficient way to raise funds. It can help to meet the financing needs of the product development, corporate growth and entrepreneurship. It effectively creates additional new functions to the traditional financial system for small micro-enterprises and entrepreneurs.

Tan Jinghui is a director of City Development Law Firm in Beijing, and an arbitrator with Beijing Arbitration Commission/Beijing International Arbitration Centre. BAC/BIAC’s case manager, Ru Ming, also contributed to the article