By Sara Seddon Kilbinger, Senior Reporter, REFIRE
Estonian digital and borderless ecosystem for real estate financing and real estate investment in Europe is making waves.
Tallinn, Estonia real estate finance and investment platform Estateguru has been awarded ‘LendTech of the year’ at the Europe FinTech Awards 2022.
The awards recognize the ever-growing innovation of the European FinTech industry. Estateguru was nominated in three categories: 'LendTech of the Year', 'Start-up of the Year' and 'Investment Tech of the Year'.
‘I'm not really interested in winning awards, but in creating real value for people with our work,’ said Marek Pärtel, co-founder and chairman of Estateguru: ‘This award has a special meaning for me because it is only thanks to our self-developed technology for digitizing the lending process that we have been able to support more than 136,000 investors on their way to financial freedom and pay them a total of almost €50 million in interest. The same technology has enabled us to process more than four million investments worth nearly €600 million and extend them as loans to thousands of small and medium-sized enterprises and project developers. Our continuous hard work has made us a pioneer in speed and flexibility when it comes to offering real estate secured financing solutions in eight countries.’
Group praised for its ‘speed and flexibility’
The LendTech of the Year award highlights Estateguru's role as a pioneer in the lending space, closing the funding gap for small and medium-sized businesses in Europe through the continuous technological development of its cross-border platform. As FinTech Intel, the organizers of the award, put it: ‘The winner of the LendTech of the Year award is doing impressive work to successfully shape and advance real estate finance. This FinTech focuses on speed and flexibility. As a result, it is achieving outstanding results in Europe and beyond, closing major financing gaps that would otherwise have hindered the business development of its target clients. A true success story for Europe.’
This year, Estateguru plans to finance deals in Germany to the tune of around €200 million, up from €68 million last year. The firm launched a new round of financing on the crowdfunding platform Seedrs in April this year and raised more than €1.4 million.
It exceeded its initial funding goal of €350,000 in June 2020 by 261% in a first round on Seedrs, raising €914,536 in capital. A second round followed in 2021, whereby the funding goal of €500,000 was also exceeded by 260%. All loans are secured with a first-ranking land charge, something that is particularly attractive for would-be borrowers who do not fit into the more rigid lending guidelines of traditional lenders. Private and institutional investors, in turn, can invest in these loans through Estateguru and build a diversified real estate portfolio.
Founded in Estonia in 2013, Estateguru is developing a digital and borderless ecosystem for real estate financing and real estate investment in Europe and beyond, connecting different service providers, SMEs and investors in a single marketplace. In the past 6 years, it has expanded its offerings to 8 countries and financed loans worth in excess of €555 million and interest payments of €43 million to 125,000 investors. Assets under management amounted to €220.3 million at the end of 2021.
Revenues hit new time high, despite macroeconomic challenges
Despite the macroeconomic environment, revenues increased by 26% to €2 million in the first half of this year. The company financed 348 projects with a total loan volume of €50.2 million. In the first quarter of 2021, 239 projects with a volume of €46.2 million were financed. Assets under management recorded the strongest growth with an increase of 80%: the value of the loan portfolio rose from €139 million to a new high of €251 million.
However, the ongoing war in Ukraine and historically high interest rates are ricocheting out to the lending market as well, particularly in light of a slowdown in economic momentum, causing some lenders to question whether a price correction is on the cards. For now, Björn Kombächer, country manager Germany at Estateguru, believes this risk is low: ‘Growth will cool somewhat and, due to the high inflation rate in the absence of wage inflation, prices could stagnate or fall slightly in isolated regions,’ he said. A significant price correction in the overall real estate market is unlikely, however, because nothing has changed in the fundamental housing shortage. In addition, demand on the investor side is also very stable, as the stock and commodity markets continue to be characterized by high volatility. As part of a good diversification, real estate is and will therefore remain without alternative for investors.’
