Real Estate Market
Interview with Kryptoszene: "Leipzig is an attractive real estate location for various reasons".
Marc Drießen is CEO and Co-Founder of Bloxxter and lecturer in real estate at the Northern Business School. In his career, he has already managed assets worth 35 billion euros. In an interview with Kryptoszene.de
Hello Mr Drießen, Bloxxter is designed to make it easy for investors to invest in premium real estate. So is your offer primarily intended for users with a lot of capital?
We founded Bloxxter with the aim of giving everyone access to high-quality real estate. That's why we reduce the barriers to entry as much as possible. So anyone can use Bloxxter from 500 euros to build up their own portfolio. Of course, you can also invest significantly more - but the crucial thing is that with Bloxxter it is not a condition to have a lot of money in order to get premium investments.
Please explain your business model? Do your investors finance the properties and then can benefit from rental payments?
Investors invest in a bond backed by premium real estate in our first product. The fixed interest on the security and the repayment are secured by the ongoing rental income from the properties and by the registration of a land charge in the land register. Investors thus benefit from an interest rate significantly above fixed-term deposits or similar investments without having to forego the security of real estate.
You offer your investors a fixed interest rate of 3%. Why do you go this route at all? Wouldn't it be cheaper to rely on classic bank loans in times of low interest rates?
This type of financing is widespread among institutional investors. The Bloxxter team, through its institutional experience in the past, offers the possibility for private investors to invest in the same way as institutional investors have in the past. The private investor's investment reduces the senior bank loan, which in turn reduces the bank's interest rate. In sum, the private investor receives what would otherwise have gone to the bank.
The voices warning of the bursting of the real estate bubble are getting louder and louder. How do you see the risk?
There are many factors that are taken into account for the valuation of our properties. Of course, factors such as the overall market in Germany are also taken into account, as is the market valuation for Leipzig. Some statistics show that in some metropolitan areas there are purchase prices in the residential property sector that are not supported by rental growth. We are talking here about purchase prices that are not infrequently 10,000 euros per square metre or more. The Bloxxter investment, on the other hand, corresponds to a mortgage lending value of around 2,000 euros per square metre. This is well below what a new building without land would cost. So Leipzig is currently not only one of the most dynamic markets in Germany, but also has considerable catch-up potential compared to other metropolitan regions.
To what extent do such market concerns influence your day-to-day business?
Indeed, we have more frequent customer enquiries about the impact of Covid-19 on our properties. And we can say with some pride that our strategy of choosing properties in central locations in the top markets with tenants who are not sensitive to the economic situation has proven to be correct.
Compared to our expectations when we bought the properties, we were able to increase rental income despite Corona. We can therefore quickly reassure our investors and say that we are not only not negatively affected, but are even ahead of plan.
There are currently two large properties in Leipzig in your portfolio. Why Leipzig of all places?
Leipzig is an attractive real estate location for several reasons. On the one hand, the purchase prices here are still so attractive that investments can still generate reasonable returns with a high degree of stability, as the potential for setbacks is manageable. But that is only one factor: for us, the combination of the actual target investments, i.e. the micro-location, occupancy rate, rental period and much more, is decisive. The interplay must fit to make it a high-quality asset. And we attach great importance to offering our investors only premium investments.
What are your current plans for new properties?
We are currently reviewing several potential projects and want to offer our investors at least one more investment this year. Bloxxter.com for sale. I will be able to give you more details in the third quarter.
Thank you for the interview
You can read the entire interview here (German version only): https://kryptoszene.de/news/experten-interview-leipzig-ist-aus-verschiedenen-gruenden-ein-attraktiver-immobilienstandort/