*This is a sponsored post written in collaboration with Shareable Asset. The article is written by myself and the opinions expressed here are my own.
I am sure some of you guys have heard of the Shareable Asset post by Now. Some of the financial bloggers that covered this are 3Fs, SmallCapAsia & Got Money, Got Honey.
If you have not heard of Shareable Asset, that is completely normal too. I have not heard of it either until they contacted me.
Shareable Asset launched its website only on 19 May 2020 and its app on 22 May 2020. So this is an extremely new company that just entered the fintech space in Singapore. Though several media such as Yahoo Finance and South China Morning Post have released a full-featured article on them.
Do you frequently hear all those property gurus advertising how you can invest in properties without little or no downpayment? Well, now you can really invest in properties with very little money through Shareable Asset. So what is Shareable Asset and what do they do?
1. How does Shareable Asset Works?
What Shareable Asset is trying to do is to tokenise real estates around the world so that retail investors can own a fractional share of it for as little as £100. That is the gist of what they do in a one-liner.
They are trying to replicate the process of buying real physical properties in the digital world. Traditionally, buying properties requires a huge outlay of capital, research, time and middlemen agents (brokers, legal, tax and etc.) This makes investing in properties reserved only for rich people. But with Shareable Asset, they break the property down into multiple units digitally so that you can gain access to them directly.
Shareable Asset is using the technology of blockchain and it is running on the Ethereum platform. As you all know, transactions on the blockchain are immutable, transparent and verifiable by anyone publicly. This guarantees the right of ownership to the properties you own.
For rental income, it will be divided proportionally based on the % share you own. If a property is divided into 1000 units and you own 1 unit. Then your share is 0.1% (1/1000). If the rental income is $100,000 monthly, then you collect 0.1% x $100,000 or $100 per month.
Similarly, for sale of property (e.g. $1 million), you would get 0.1% x $1,000,000 or $1000 back from your investment. Sale of the property is based on voting rights. The more units you hold, the more say you have in your votes.
The rental income and capital appreciation concept is exactly the same as you would buy real physical property. The only difference is that instead of owning 1 property, you can now own 0.01 property with Shareable Asset.
2. Difference between Shareable Asset and REITs?
Then you might think, what is the difference between this and REITs?
Firstly, you are owning DIRECT legal ownership of the properties in Shareable Asset. Think of it as owning real physical properties legally. Just that now it is in fractional units. But if you are buying REITs, the properties are not under your name. You are just owning a share of the trust which manages the properties. It belongs to the trust and not you.
Secondly, all rental income for Shareable Asset would go directly to the investors since it is a direct shared ownership structure. You only have to pay an annual recurring platform fee of between 0.2% – 0.5% depending on the asset value. But for REITs, a part of those rental income goes to management fees, divestment and acquisition fees before trickling down to unitholders.
The third is volatility. A share in the Shareable Asset represents physical ownership of property. It is less volatile as the value of the property doesn’t fluctuate on a daily basis, but revalued once annually. This is in contrast with REITs where prices go up and down every day based on the collective investor sentiment.
Lastly is liquidity. While the asset is less volatile, properties are also more illiquid as compared to REITs. It is harder to cash out your property investments as compared to REITs where you can just sell your shares immediately.
There are two ways you can exit your investment. One is when there is a majority vote to sell the asset and the sales proceeds would be distributed proportionally. Second is to sell it through an exchange which the company will set up in the next few months. This is still a work in progress as they are planning to apply for the market operator license from MAS.
3. How does Shareable Asset Make Money?
Shareable Asset’s business model is quite simple. They are just a platform that connects property owners and investors. On the left hand, it is those that own property who wants to sell it. On the right hand, it is investors who want to invest in physical properties.
If a property owner wants to register its assets on Shareable Asset, they have to pay a registration fee of between 1% to 2% depending on the country, size and type of property. And if the property is successfully sold to investors through Shareable Asset’s platform, they get another 5% cut from the transaction.
If an investor wants to invest in properties that are listed on Shareable Asset, they have to pay an annual platform fee of between 0.1% to 0.2% as mentioned earlier above. You can see that most of the revenue is earned from asset owners rather than investors.
Shareable Asset aims to tokenise assets worth between US$50 million and US$100 million this year. Their expected revenue for 2020 is $688,000 and they are projecting break-even with a profit before tax of $240,000 by 2021.
4. Is Shareable Asset a Scam?
The burning question right now is probably whether Shareable Asset is a scam? We have not heard of this company before and they randomly popped up out of nowhere. What if they take all the depositors money and run away?
Well, the first and most assuring fact is that they have obtained the Capital Markets Services (“CMS”) License from the Monetary Authority of Singapore (“MAS”). So Shareable Asset is officially licensed to operate this legally.
Having a CMS license means MAS has already vetted through the track record of its applicants, strength of internal risk management and compliance system, business models, projections and associated risks. It is their job to do so and this is to protect investors like you and me.
Secondly, all investors’ funds including investment proceeds and rental income are managed by an approved 3rd party custodian, Vistra. Vistra is also regulated under MAS and they act as an escrow agent to ensure that the usage of funds is explicitly used for the purpose intended. So nothing funny goes on within Shareable Asset. They don’t touch or manage investors’ money in any way.
Thirdly, Shareable Asset is integrated with SingPass MyInfo service which complies with Anti-Money Laundering regulations.
lastly, all financial transactions and asset ownerships are recorded on the blockchain. It would be really dumb for someone trying to launder or steal money through Shareable Asset. This is because every trace of your digital footprint is publicly recorded and stored. And every transaction is tied to the identity of user which is registered with Shareable Asset.
5. Shareable Asset’s First Deal – Student Accommodation
As Shareable Asset is only <2 months old, their very first property listing is a studio apartment called Horizon located at Sunderland, England. It is a 250-year leasehold property and there are a total of 154 studio apartments.
Horizon is located 0.65 miles away from the main University of Sunderland, 0.31 miles from the city’s main shopping complex and 0.27 miles from Sunderland Central Station.
This property has fitted kitchenette, en-suite shower room, communal study area, gym and cinema room, making it ideal for students and young working professionals.
Sunderland has the second largest population in the North East of England and there is a strong demand for student accommodation & housing. The UK is known to have many high-quality universities and they host more than 432,000 foreign students, second only to the US. JLL further projects another 500,000 of full-time students attending universities in the UK by 2030, a 75% rise in demand over the next decade.
Investing in student accommodation has recently been a big hype. Many big funds in Singapore such as GIC, Far East Orchard, Mapletree Investments and SPH has been ploughing in money into this space. This is because student accommodation has strong demand and its income is more resilient as compared to commercial, retail, industrial and etc.
The estimated NET rental yield for this project is 9% and this has been contractually agreed by the developer for 3 years. The rental payments for Horizon would be made on a quarterly basis. After this 3 years rental assurance agreement, the rental amount is forecasted to be between £125 – £170 per week.
With Shareable Asset, now you can are given the opportunity to own some of these properties directly. This was not possible before unless you have the capital. So it would be interesting to get a piece of it.
6. How to Invest in Horizon, Sunderland?
Horizon, Sunderland is the first of many more properties to be available on Shareable Asset. For more information on this Horizon property, refer to the attached brochure and relevant documents found under the app when you log in.
Personally, I have already signed up with them as I like to explore all these new stuff. The identification verification process is also very simple as all you’ve got to do is to sign in with your Singpass (MyInfo).
The process is hassle-free, as the form is pre-filled. There are no submission of IDs and/or any other relevant documents, usually required during the onboarding process. But if you do not have a SingPass or you are not from Singapore, then you have to do all the above mentioned.
You also get free £3 for your first investment if you use my referral link here. Just click “Get the App” if you are using a desktop. If you are using a phone, the link redirects you to the SA app.”
Here is a step-by-step process of how you can get started immediately.
- Download the Shareable Asset App on your mobile
- Sign up with your email address & set the password
- Verify your identity by logging in to SingPass
- Answer some questions to assess your risk appetite
- Click on “claim free credit” and register your bank account to get £3
- Choose which property you want to invest in & select the amount
- Keep calm and collect dividends
There are also other promotions that are going on to get even more investment credits other than the £3 when you register your bank account.
6.1 Get Free Credits for Adding Funds
Firstly, if you top up funds to Shareable Asset, you get an extra 5% of the top-up fund.
The minimum reward bonus is £1 and the maximum bonus is £500. So if you top-up £20, you get £1 (5% x £20). If you top up £100, you get £5 (5% x £100).
The incentives will be credited to your wallet immediately after you top up your funds.
The initial £3 and 5% investment credits could lower your cost for your first property investment. This promotion is still live now, but if there is oversubscription it could be terminated earlier.
6.2 Get Free Credits When you Refer to a Friend
Secondly, they also have a referral program going on. If you invite your friends and they invest above £400, both of you earn £8 for free. The referral bonus would be credited to your wallets within 5 business days after your friend makes their first investment. The tier-structure is as follows above.
Your referral code can be found under the “account settings” of your app on your phone. There is an “Invite & Earn” button where you can get the referral link to share to your friends.
If you are keen on property investing or blockchain technology, do give it a shot and play around with the app. Explore their value proposition and risk-statement to see if this fits you.
For more information on Shareable Asset, please visit their website at https://shareableasset.com/