Exploring Real Estate Crowdfunding as an Alternative Financing Option for Property Investment

Exploring Real Estate Crowdfunding as an Alternative Financing Option for Property Investment

Noorsidi Aizuddin Mat Noor^1,2*, Chow Zi Xuan¹, Sharon Chin Hin Yi¹, Siti Zaleha Daud¹, Hairul Nizam Mansor³, Farhana Diana Deris⁴, Afizan Mohktar⁵

¹Real Estate Department, Faculty of Built Environment and Surveying, Universiti Teknologi Malaysia, Johor, Malaysia

²Centre for Real Estate Studies (UTM CRES), Mass Appraisal, Housing and Planning Research Group, Real Estate Department, Faculty of Built Environment and Surveying, Universiti Teknologi Malaysia, Johor, Malaysia

³Department of Built Environment Studies and Technology Faculty of Built Environment, Universiti Teknologi MARA, Perak Branch Seri Iskandar Campus, 32610, Seri Iskandar Perak, Malaysia.

⁴Faculty of Social Sciences and Humanities, Universiti Teknologi Malaysia, Malaysia

⁵College of Built Environment, University Technology of Mara, 40450 Shah Alam, Selangor

⁵AFZ Realty Sdn Bhd, 23-1, Jalan Equine 1E, Taman Equine, 43300 Seri Kembangan Selangor

DOI: https://dx.doi.org/10.47772/IJRISS.2025.905000218

Received: 02 May 2025; Accepted: 08 May 2025; Published: 07 June 2025

ABSTRACT

This paper examines real estate crowdfunding (RECF) as an alternative financing mechanism and discusses its revolutionary potential, particularly in Malaysia, where traditional finance sources pose limits for small-scale investors and developers. The paper elucidates the role of the RECF in democratising property investment, particularly in the context of Malaysia, a forerunner in equity crowdfunding regulatory initiatives. The article employs a qualitative methodology to examine regulatory frameworks, platform operations, and investor activity, aiming to explore the broader ecosystem in greater depth. The major findings identify three distinct crowdfunding models: reward-based, equity-based, and debt-based—each characterised by specific advantages and disadvantages for creators and investors. Reward-based funding is conventional for supporting community-driven initiatives, equity facilitates shared ownership returns, and debt offers a fixed income alternative. The study indicates various advantages, including expanded market access, investment diversification, professional fund management, and portfolio customisation. Nonetheless, issues pertaining to regulatory ambiguity, liquidity, insufficient investor education, and quality assurance are critical for all platforms. The discourse centres on the necessity for a more robust regulatory framework, enhanced platform governance, increased transparency, and heightened knowledge about investor initiatives to foster trust and sustainability. Finally, the report contends that RECF possesses significant potential to transform the real estate sector, liberating money and enhancing investment for inclusive economic growth. Future studies may investigate developing trends, analyse how investors trade, and evaluate technical solutions such as blockchain to enhance platform operations. This study aims to elucidate the institutionalisation of RECF as a viable, secure, and scalable financial alternative in the real estate sector.

Keywords: real estate crowdfunding, investment platforms, alternative financing, investor protection, financial inclusion

INTRODUCTION

The real estate industry significantly influences the global economy, as property values and transactions contribute substantially to economic growth and development. Consequently, securing finance for more real estate initiatives and investments can be exceedingly difficult in such little amounts, particularly for smaller developers and investors. Conventional financing sources, such as bank loans and private equity, impose stringent regulations and elevated interest rates, thereby limiting market involvement for several stakeholders. Recently, real estate crowdfunding platforms have gained significant popularity, emerging as a more convenient method for developers and investors to secure financing for real estate projects and investments. They have contributed to real estate crowdfunding platforms that have enhanced and optimised funding for real estate projects and the overall investment process, serving as an alternative to traditional financing methods.

This activity is executed over the Internet as fundraising for a specific cause, either to commence a particular project or to support the establishment of a new venture, by voluntary contributions from several persons. Crowdfunding, as articulated by Mollick (2014), refers to the endeavour of cultural, social, and for-profit entrepreneurs and organisations to fund their initiatives online by collecting small donations from a vast number of individuals and bypassing conventional financial intermediaries. It is a method of acquiring funds for a certain cause or objective by leveraging a broad network of individuals, predominantly via the Internet. We employed technology in an innovative manner to provide real estate opportunities to investors. Democratise access to an asset class previously available to a single investor. The allure of real estate crowdfunding platforms stems from their provision of diverse investment opportunities characterised by varying risk levels (occasionally significant) and the potential for lucrative returns derived from the aggregation of relatively modest financial contributions from numerous investors, encompassing both experienced and novice participants. Real estate crowdfunding platforms have democratised real estate investment and created a novel ecosystem aimed at challenging traditional methods of resource acquisition and fostering market innovation. This article seeks to elucidate the revolutionary potential of crowdfunding in real estate finance by examining its mechanisms, benefits, and challenges.

The main purpose of this study is to handle two critical issues in real estate crowdfunding. The goal is to define the benefits of real estate crowdfunding. This paper studies the advantages of a proprietary financing strategy in order to demonstrate that this innovative investment method could represent a different way to invest in real property, allowing wider participation in the activity through diversification and theoretically higher returns for investors. The second reason is to investigate problems surrounding real estate crowdfunding. Besides the benefits of the approach, the approach has liabilities like regulatory issues, project failure and limited investor protection. In this case, solving these problems is indispensable for designing workable ways to mitigate risks and improve crowdfunding’s reliability and durability as an operating product in the real estate sector.

LITERATURE REVIEW

Malaysia’s Pioneering Role in Equity Crowdfunding Regulation

Therefore, Malaysia is the first nation in the ASEAN region to embrace a particularly specialised legal perspective on equity crowdfunding (ECF). The concept of this regulatory innovation has enabled the formation of a robust alternative financing ecosystem and a platform for financial inclusion. In Malaysia, the Securities Commission Malaysia and Bank Negara Malaysia are the main regulatory authorities for ECF activities in Malaysia. SC Malaysia is of the utmost importance to guarantee that operations on the crowdfunding platform follow the Securities Commission Malaysia Act 1993 and the guidelines established by SC Malaysia after 1993 (Securities Commission Malaysia, 2020). Malaysia’s capital market consists of two segments, namely the Main Market that accommodates the companies with sound financial performance over the years and the ACE Market that is tailored for the companies that have not been accorded a spot on the Main Market (Teo et al., 2024). The expansion of the ecosystem of crowdfunding has been made possible by the well-defined frameworks that attracted the constituted domestic and the international investors on the regulated, trusted platforms for equity investments.

Real Estate Crowdfunding: An Innovative Opportunity for Middle-Class Investors

Rapidly coming into Malaysia as an accessible investment option for the individuals in Malaysia is the real estate crowdfunding (RECF), which is accessible to its owner in the middle-income sector due to the fact that they had been unable to invest in real estate before due to financial constraints. On the surface, the average Malaysian can not really afford the high and expensive down payments, lawyer fees, plus the never-ending costs of maintaining a real property investment. RECF addresses this difficulty by allowing aggregation of capital by a consortium of investors whereby they can be able to participate in real estate projects, reducing the entrance barrier.

This democratised investment framework suits Malaysia’s spirit to discourage the wealth gap and widen the wealth base. Chin et al. (2021) show that a great many young and middle-class Malaysians are increasingly inclined to utilise property funding stages to get to the property market. This has been further fuelled by efforts, for instance, that show the realisation that digital platforms can empower first-time homebuyers to participate in co-investing in properties without full ownership. Furthermore, these platforms usually pre-screen listed projects so that the inexperienced investors are empowered to make good decisions. For sure, they should recognise that, as with any investment, there are risks associated with these, and they should do due diligence before injecting capital.

Navigating the challenges and regulatory landscape of RECF

Despite the numerous advantages of RECF, its development in Malaysia remains nascent, hindered by regulatory obstacles and a lack of familiarity among investors with the strategy. Currently, real estate enterprises can exclusively gain advantages from crowdsourcing but cannot directly purchase properties using crowdfunding platforms (Securities Commission Malaysia, 2020). This information indicates that the investor may acquire equity in a real estate corporation or development firm, but not in individual property units. The restrictions of RECF hinder the sector’s full potential, affecting not just RECF itself but also those seeking real estate as a tangible asset. Furthermore, while RECF platforms conduct their own due diligence on projects before listing, investors must remain vigilant and perform independent research to verify assertions and evaluate risks. RECF enables broader participation in real estate markets.

Imagine a fictitious RECF platform – ‘RumahFund’—that connects individual investors in Malaysia to mid-sized property developers who are looking to raise 5 million RM to build a mixed-use condominium in Johor Bahru. The investors are able to enter with as low as RM1,000, choosing either an equity or debt-based model. Based on public information on real platforms, like pitchIN and Ata Plus, these kinds of projects normally raise funds in 30-60 days and promise returns of 8-12% per year. This hypothetical shows the implementation potential that RECF has in the real world in reducing entry barriers for investors.

Their knowledge, as noted by Eversole (2022), extends beyond existing platform data, encompassing factors such as developer credibility, local market trends, and financial projections. Nevertheless, a limited segment of the public remains unaware of the existence of these investment strategies, necessitating urgent investor education and outreach initiatives. Consequently, Malaysian policymakers may need to reassess the existing framework to facilitate a broader array of crowdfunding methods, particularly those incorporating fractional ownership of tangible real estate assets, to realise their full potential. To remain competitive in the evolving regional and global fintech market, Malaysia must incorporate legal and institutional frameworks that promote inclusivity in investing platforms.

Categories of Real Estate Crowdfunding

Incentive-Driven Crowdfunding

One approach is reward-based, where the contribution of an idea to the success of its realisation is exchanged for non-monetary incentives, such as product access or early enjoyment; contributors may also receive rewards for their input. The creative industries, particularly in real estate and architecture, have notably embraced this strategy. Real estate can facilitate reward-based fundraising for projects aimed at revitalising communal areas or preserving historical structures. Recognition plaques, invitations to inaugurations, and various expressions of thanks for the benefactors are feasible. This model seeks to assess emotional and social returns on investment instead of financial gains; nonetheless, it is important to note that this cohort represents a very limited segment of aspiring internet entrepreneurs. Steigenberger (2017) asserts that intrinsic advocates of crowdsourcing are driven by the aspiration to contribute to the cause and engage in a communal effort via reward-based crowdsourcing. The paper emphasises the necessity for a continuous communication channel and regular updates for stakeholders engaged with backers. This model has limitations. Potential financial contributors may decline due to the lack of financial returns. Success will occur when the initiatives are appealing and the techniques employed to promote them are effective.

Equity Crowdfunding

Investing in a real estate project or company via an equity crowdfunding campaign allows for ownership of a stake in that project or company. In return, shareholders will obtain shares as well as a portion of the earnings, such as dividends or capital gains from the sale of the property. It democratises real estate investing by enabling individuals to engage in ventures that were previously accessible solely to institutional investors. Battisti et al. (2020) elucidate how equity crowdfunding serves as a mechanism for financing development in the real estate sector while also providing diversification opportunities for private investors within this domain. Equity crowdfunding offers numerous benefits; nonetheless, it requires stringent regulation to ensure substantial investor protection and transparency. One significant advantage of equity crowdfunding is that it aligns the interests of investors and developers with those of the investors. The initiative is effective due to the reciprocal advantages for both sides, fostering a collaborative learning environment. Investments in private real estate transactions, particularly stakes in private real estate ventures, are prone to illiquidity and risk because of information imbalances between investors and developers.

Debt-Based Crowdfunding

Peer-to-peer (P2P) lending, also known as debt crowdfunding, is a lending mechanism wherein investors provide capital to real estate (RE) developers in return for set interest payments over a specified duration. Nonetheless, investors in online crowdfunding platforms, such as Kickstarter, do not possess ownership interests in the project; rather, they function as debtors.

This model presents numerous advantages. Investors can anticipate the returns and repayment timeline. It serves as an alternate funding source for developers, with less stringent conditions than bank loans. Ameziane (2024)elucidates the mechanics of debt crowdsourcing, highlighting how crowdfunding loans can facilitate financing for real estate transactions that could otherwise remain unfilled.

Two cautions, however, are that debt crowdfunding entails significant risk. Investors are primarily concerned about the potential for borrower default, which may lead to the forfeiture of principal and anticipated interest payments. Therefore, it is imperative to conduct comprehensive due diligence and risk assessment prior to making such investments.

Platforms: Guaranteeing Equity and Clarity

Real estate crowdfunding platforms serve as mediators, ensuring fairness and transparency in real estate investments. They have the responsibility to keep a safe distance from those risks that might appear with crowdfunding projects and to protect the rights of investors, using human, technological and financial resources sufficient to achieve it. The platform insists on creating a self-contained ecosystem, which restricts raising and investment. Security and regulatory compliance is ensured through constant monitoring of things such as anti-money laundering. Real estate is an asset that unfortunately involves some risk. Crowdfunding platforms exist that enable investors to participate in the real estate = thing = asset through an active role while mitigating the historic risks associated with such investments (Jalil et. al, 2025). The Guidelines of Recognised Markets delineate the regulatory framework of these platforms by the Securities Commission Malaysia (SC). Unlike an RMO, a recognised institutional investor (RII) has continuous obligations (2024), and the criteria for registration are delineated under Securities Commission Malaysia (2024) along with the conditions that apply for an RII. By setting standards, it is made sure that the crowdfunding ecosystem works with integrity, openness, and accountability, which thus increases investor confidence in the system.

Issuers: Maintaining Transparency and Adherence to Regulations

In order to comply with the regulatory standards, real estate crowdfunding issuers must abide by high registration regulations. Within an issuer’s RM3 million aggregate limit, equity crowdfunding is allowed under the Proposed Regulatory Framework for Equity Crowdfunding (Securities Commission Malaysia, 2014) for a 12-month period. They will have to reveal all information about business and finances so that the investor is completely aware of which company he or she is investing in. In order not to compromise the integrity of the crowdfunding process and the trust of investors, the issuers are not allowed to market their products outside the crowdfunding platform.

The Capital Markets and Services Act 2007 (CMSA) has its own legislative framework on which these standards are based. The Securities Industry Act 1983 and the Futures Industry Act 1993 became part of it when integrated under the Capital Markets and Services Act (CMSA), which directed activities, markets and intermediaries in the Capital market (Securities Commission Malaysia 2007). These regulations that the issuer provides contribute to the establishment of a transparent, controlled environment, which shareholders consider credible.

Investors: Reconciling Opportunities and Risk Mitigation

Real estate crowdfunding is about investors with allocated amounts as per their classifications. With investors more sophisticated, they do not impose limits on their investments, and their cash is freed to be used as they please. In addition, angel investors are to be put on a leash, and they should be limited to investing a max of RM500,000 in the same year so that the resource allocation is as transparent as possible, such that no unfair recipient can be found among them. This is to encourage portfolio diversification and risk management (Securities Commission Malaysia, 2014) by limiting an individual investor’s investment in any one issuer to up to RM5,000. In such a crowdfunded environment fitted to these investment limits, giving participants an equitable and sustainable offer and exposure to possibilities and risk as regards investments. The Replified Markets’ Guidelines for Recognised Markets emphasise that investor protection is important and stipulate the means of technical protection of the investors and provide them with enough information. The first set of measures comprises the provision of clear and concise information on the investment opportunity, risk probability, and the investors’ principles (Securities Commission Malaysia, 2024). Provisions such as Table 1 are necessary to make it a reliable environment for real estate crowdfunding investors.

Table 1. Comparison of RECF Models

BENEFITS OF REAL ESTATE CROWDFUNDING

Real estate crowdfunding platforms offer a wider range of real estate options, including rental properties, mortgages, and personal real estate, compared to what the average person can access. This advantage extends to anyone who can afford to participate in the arrangement. The biggest benefit is the ability to pool resources from multiple investors, reducing the need for individual capital deployment. Crowdfunding can help individuals without a current income participate in real estate projects. Crowdfunding platforms allow the aggregation of resources, giving access to premium real estate investment options, like residential, commercial, and development projects. The inclusive strategy will help them to attract more investors to jump into a good, profitable real estate market while it offers individuals seeking diversification and adding value to their wealth and financial portfolios to reach their goals.

Additionally, there are investments in several initiatives that give the investor diversification, reduce their exposure to one project, and mitigate risk. By diversifying capital in real estate, investors will be able to reduce both the capital allocated to any given property or market and their risk and volatility. This diversification approach delivers unlimited long-term growth and commitments to the stability of hazards, coupled with making one more resilient to them. Real estate crowdfunding is a way for investors to diversify, manage market volatility confidently and continue their financial practices in the real estate sector.

In addition, these platforms offer professional management services that utilise their skills and experience in due diligence, project management, and investor relations. This experience frees investors from spending excessive time and effort on optimising investment operations, thereby saving money. The platform’s professionals are trusted by investors with vetting opportunities and project management; they risk assess and evaluate projects before carrying them out if they are plausible. They have expertise for managing their risky and non-risky projects, which protects the investors from the big cost of errors or neglect, which may leave them with a loss of funds. Furthermore, our skills as one of the best management units on the platform assure investors’ comfort at every phase of the investment cycle, from project selection to planning and delivery communications. Therefore, our investors’ continued trust in the platform and our processes helps us achieve optimal investment results. Real estate crowdfunding is a renowned investment that requires careful monitoring, enhancing investor participation, systematising the investor experience, and making it a viable and sustainable form of investment for the long term.

Real Estate Crowdfunding should be very transparent, and what makes it so is having frequent and sometimes even daily status updates on project status, financial performance, and the market in general to build trust and knowledge of the associated risks. The combined effect of robust transparency in investments and motivated investors is that investors can monitor their progress, seek the assistance that they need, make corrections as needed, and align their interests closely with the platform operator’s interest, leading to a collaborative relationship between the parties based on mutual understanding. Using Transparency as an educational tool in the market helps to enhance the knowledge of the real estate sector and its strategies for investors who trust this piece of information for sound decision-making. It leads to the collaboration and sharing to exchange ideas among investors, developers and professionals in the real estate field, which helps in increasing investors’ involvement in real estate and, in the long term, the real estate working success.

Real estate crowdfunding platforms enable investors to select projects that are in line with their tastes, risk tolerances and financial goals, which in turn will dictate what they invest in, so this is optimal decision-making. It is in relation to the freedom that investors enjoy in forming their portfolios based on their situations. Real Estate Crowdfunding platforms are customised for a high level of investing options available: You can buy properties which fall within your interest, risk tolerance and preference. It enables investors to choose projects in which they wish their financial outcomes to be capital appreciation, income generation, or balanced.

Real estate crowdfunding platforms normally predominantly benefit seasoned developers and real estate professionals in that they collaborate with them to ultimately help investors reap the benefits of their expertise and their networks. By conversing with industry experts, the platforms ensure that their investment options have additional quality that investors enjoy from both the expertise in the market realm and from the verified stories in their past. This kind of strategy is very much trusted by the investors, and they can take their proper decisions about real estate investment. This endeavour will be successful when combined with experienced experts and developers, as they consolidate resources and networks and skills. The collaboration with the industry professional as well as the crowdfunding platform makes investment better with regards to the elevation of investor happiness, confidence and improved returns in the real estate market.

CHALLENGES OF REAL ESTATE CROWDFUNDING

Real estate crowdfunding is a new and realistic real estate development and investment financing available to developers and investors. However, despite the benefits, the business’s sustainable growth needs to tackle the challenges of crowdfunding. Real estate crowdfunding is part of any investment market, and going along with it, it includes safeguarding investor interests in the investment market. Yet the amount of protection provided to investors is not uniform where the crowdfunding is orientated towards different sorts of projects. This is because crowdfunding is less than the standard of the procedure of standardised due diligence and full transparency obligations. Such a lack of transparency may also increase the investors’ exposure to ambiguous project risks, unclear financial performance, and deteriorating sponsor trust. There are insufficient timely updates about the progress and financial status of the project, which makes it challenging for investors to ascertain whether or not it is a viable investment. Adopting and implementing essential steps will facilitate the development of trusts on the crowdfunding platforms to ensure and fortify investor protection systems and improve due diligence methods.

Due to liquidity concerns, real estate crowdfunding has a significant impediment. Investments obtained from a crowdfunding platform are less liquid compared to publicly tradable assets. Invested capital is normally not available until the project ends or until an exit event, such as a property sale or refinancing. This liquidity may result in investors facing difficulties accessing their funds or flexibility in their investment portfolio. Additionally, real estate transactions also cause a loss in the liquidity of the market because of their length. Such difficulty can be alleviated by certain platforms that provide redemption choices or secondary marketplaces, although these platforms themselves have their own limitations as well as additional costs. Real estate investment is attractive, but it comes with a liquidity challenge the investors must manage. Platform operators and investors should tackle liquidity issues and explore ways of improving liquidity of real estate crowdfunding platforms.

Expansion in the marketplace due to the emergence of crowdfunding platforms increases competition and the challenge of standing out across platforms and maintaining quality control on each. Proliferation of the crowdfunding sites has increased the industry’s competitiveness. As more and more platforms emerge trying to attract entrepreneurs seeking finance and investors seeking investment opportunities, it is becoming more and more numerous. The increased competition forces all crowdfunding platforms to compete with each other, each trying to make the best platform in the market to attract investors, which makes each market offer something unique or something that is not present in all the platforms. This may influence the platforms to adjust their strategies, for example, lowering the minimal quality requirements to attract more entrepreneurs in order to improve the quality of the whole thing on the platforms. Platforms have gotten more competitive in the landscape when it comes to adhering to stringent quality control requirements. Relaxing requirements for platforms will attract them to recruit large numbers of users and projects and finally result in a drop in the quality of the average offerings provided to investors.

Because of regulatory challenges, real estate crowdfunding platforms have a significant problem to solve. Entrepreneurs who wish to raise funds on such platforms should observe the rules and regulations pertaining to crowdfunding. In addition to that, these platforms must adhere to several rules and regulations pertaining to the offering of securities and other kinds of financial transactions, as well as investor protection. However, these regulations may bring more complexities and costs with the deployment of these across diverse jurisdictions.

Furthermore, changes in law or updates may come with more complications that will have to continuously be monitored and updated to ensure one’s compliance. But if it didn’t comply with whatever legal requirements they had, it could possibly be fined, get penalised legally—perhaps even suspended operationally — and kill their brand and user trust entirely. Platforms attempt to overcome this challenge by utilising the resources available to legal counsel or compliance offices, who are tasked with interpreting the rules, implementing the necessary procedures, and monitoring any changes in the regulatory landscape that meet the most basic needs.

Additionally, they should be proficient in communicating with regulators and industry stakeholders to facilitate clear and streamlined policies that reduce regulatory complexity, thereby creating an enabling environment for real estate crowdfunding innovation.

There are RECF platforms such as FundPlaces in Singapore that run in accordance with the fintech sandbox of the Monetary Authority of Singapore. They are mainly focused on commercial property investments, and it requires the higher investor accreditation. Indonesia, however, emphasises RECF by means of the OJK-governed equity forms, including Danasyariah, involving residential projects with Islamic finance characteristics. On a relative basis with Malaysia, both countries show a more mature ecosystem for investor base, platform diversity and regulatory clarity.

CONCLUSION

When it comes to the extensive growth of internet access, social media participation, and digital platforms, crowdfunding can be referred to as a profoundly revolutionary financial innovation over the past decade. Apart from providing an additional source of funding, it has, in recent times, come to be regarded as an accepted means of capital raising, particularly by early-stage ventures and property development. Delivering economic utility is not enough for Crowdfunding, in addition to economic utility, Crowdfunding has been found to have significant advantages which are non-financial, such as market interest validation, acquisition of user-generated ideas, and user-generated feedback from prospective buyers, as described in Macht and Chapman (2019). Crowdsourcing has come up with supplementary benefits for entrepreneurs, and this fundraising method is now a strategic tool for entrepreneurs to use, both as growth and market testing tools.

There is a huge possibility of real estate through crowdfunding. Until today, we had a very long tradition of capital obstruction to real estate investing (due to this reason it stayed in the hands of institutional investors and the high-net-worth ones). Crowdfunding breaks this exclusivity down by democratising access to how property is invested so that the only resource needed to participate in property investments is a small portion of your small income. Such democratisation may lead to a more inclusive investment climate, inject new dynamics in the real estate sector and increase liquidity in property markets. Other examples of the usage of such crowdfunding for property investment include Ethis Malaysia, FundMyHome, and Ata Plus.

However, opportunities with real estate crowdfunding exist at this point in time, with its disadvantages also needing to be addressed for sustainability. One of the ones generating concerns is their regulatory clarity. Despite such progress, Regulation 11 of the Capital Markets and Services Act 2007 has not been enacted in relation to equity crowdfunding, and the Securities Commission has also released the Guidelines on Recognised Markets, which could facilitate some aspects of real estate crowdfunding. Now, legislation has permitted equity crowdfunding for real estate businesses, but there is no specific path for regular investors to invest in them directly. Because of the regulatory gap, the industry grows in vain, and platform operators and players suffer from the confusion. Therefore, any future revisions of the law should bring forth a comprehensive, precise legal explanation that details the nuances of real estate crowdfunding, including preserving the rights of the investor, the platform bearing responsibility, information being disclosed, and so on.

The second important item that calls for attention is Investor Education. While real estate crowdfunding is still a nascent concept, investors are essentially unfamiliar with the mechanisms through which their funds are to be deployed, the type of funds available for investment, along with the associated hazards they may encounter. Like other forms of crowd investing, this method of investing has its lack of liquidity relative to stocks and bonds, and, as is the case for any equity or bonds, an inherent risk of project failure, delayed returns, or market volatility. Real estate crowdfunding will need to be educated exclusively by stakeholder efforts to help regulators, platforms and financial educators to inform the public about the advantages and shortcomings of real estate crowdfunding. As such, this activity should create awareness for the investors and groom them with the requisite skills and knowledge to effectively invest in the financial markets.

What is more, technological progress will be a crucial criterion for the development of real estate crowdfunding in the future. In terms of both transparency, security, and speed of transactions, the technology of blockchain may strengthen crowdfunding sites . The use of real estate crowdfunding systems allows for automated investment agreements that are distributed on a distributed ledger using smart contracts and which are executed automatically. Fintech can be partnered with the platforms to build up the solutions like AI-driven risk assessment tools and machine learning models to strengthen the evaluation of the investor profile, authenticate fraudulent activity and assist in compliance with Know Your Customer (KYC) and Anti Money Laundering (AML) regulations.

Real estate crowdfunding will need to be scaled through the coordination between the private and public sectors. Incentives and subsidies from government agencies, as well as from financial institutions, may be supplied to promote platform innovation; the legal environment will be kept flexible and platform crowdfunding will be included in the country’s economic growth goals. Real estate crowdfunding is supporting affordable housing initiatives, which also aligns with national goals for increasing homeownership and lessening housing shortfalls, especially among poor and middle-income people.

This research plays a crucial role in the long-term growth of the environment. For the long-term study, collaboration between the academic institutions, the industry analysts, and the politicians is required to study the crowdfunding trend to understand the performance indicators, how to fill the gaps in investors’ confidence, and the regulations. ng across jurisdictions opens the door to understanding best practices and acting as a foundation for local market utilisation of global programmes to connect with local settings. The United States and the United Kingdom have more mature crowdfunding ecosystems, with the learning from several regulators’ actions and inactions as a good case study. After recognising these factors, Malaysia and other ASEAN countries can invent unique strategies.

This paper features the RECF as a revolutionary financing option for Malaysian real estate. Some of the key contributions include explaining the structure and advantages of RECF, outlining regulatory and working dynamics, and defining the roles of stakeholders. For regulators, normalising platforms’ guidelines and protections for investors is essential. Transparency and due diligence reporting ought to be enhanced by the platforms. Investors need to be enlightened on RECF risks and return expectations. Future research should include local case studies, the analysis of platforms’ performance, and the comparative reviews with RECF models in Singapore and Indonesia to situate Malaysia’s position within the ASEAN region.

One of the best things in the future of crowdfunding is going to be real estate crowdfunding. The opportunity will enable capital mobilisation and that of retail investors as we seek to advance on an inclusive path of economic growth. Nevertheless, its implementation depends on continuous efforts from all the parties involved, including regulators, the platforms, the issuers, the investors, and the researchers. Further development depends on improvements in all these domains. The real potential of real estate crowdfunding in Malaysia and other emerging markets would be unlocked, and larger economic involvement would be empowered by advancing real estate crowdfunding in Malaysia and other emerging markets and facilitating a transparent, informed, and secure ecosystem.

ACKNOWLEDGEMENT

In standard spoken words, our lifetime gratitude extends far beyond. We would like to thank members of the UTM Mass Appraisal Housing and Planning Research Group for their generous explanations when developing our project. We thank the respected reviewers for reviewing the paper, but the remaining mistakes are ours and not theirs.

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