South Australia is leading the way in the real estate investment market, piloting a new online service that allows people to buy part of a property in Adelaide for a fraction of the cost, making it more affordable for those who want to invest in the housing market.

The new service, trialled by international technology firm The Lakeba Group, breaks the title of a house into ‘bricklets’, allowing potential buyers to purchase parts of a property online. After the purchase, the new owners can keep or trade their ‘bricklets’ as shares.

For example, if a developer is selling a $400,000 apartment, they can choose to break up the title of the property into 20 ‘bricklets’, and then sell those for $20,000 each.

Investors can then purchase part of the deed online, giving them direct ownership, or they can choose to trade their ‘bricklets’ just like shares.

As real estate prices skyrocket, making it harder for people to get their name on a land title and to build a portfolio, owning a ‘bricklet’ appears to be a more affordable way for young investors to enter the market.

“On average we are looking at selling each ‘bricklet’ at approximately $20,000 to $30,000. But the final price also depends on the value of each property,” says Giuseppe Porcelli, Founder and CEO of The Lakeba Group.

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The SA government has welcomed the initiative, with two apartments on Angas Street in central Adelaide the first to be sold as part of the pilot program.

“It’s new technology, it’s the first time it has ever happened anywhere in the world and it is great news for South Australia,” said David Ridgway, SA’s Minister for Trade, Tourism and Investment.

The idea of buying a slice of the Adelaide property market for a fraction of the cost is expected to appeal not only to pensioners and “mum and dad” investors, but also millennials who can’t afford to buy a whole property.

Despite the hype, property experts appear sceptical about the whole initiative, advising potential buyers to be cautious and investigate the capital growth opportunity and return on their investment before they make their move.

“Similar types of real estate investments such as pooled income hotel, serviced apartment schemes and student accommodation have been available on the market for some time. They have shown some reasonable yields over time but very little capital growth,” says Nick Ploubidis, Principal at LJ Hooker Property Group for Kensington and Unley.

“The notion of purchasing a ‘bricklet’ with a low cost of entry can be attractive to investors who want a return with little capital behind them. It is a similar investment to the stock market or a syndicate purchase. However in this case you have little or no control and exiting the investment may be difficult due to the market size. Think bank financing and leveraging the asset which is a big attraction to real estate investment.
“I personally would view this as purely return on your money like any other structured investment product. I wouldn’t look at it as a way into the property market,” argues Mr Ploubidis.

The Lakeba Group says demand for the service is a reality, and that there are already plans to expand the service to other Australian states.

“As with all investments, I would urge people to get some external advice,” says Minister Ridgway, “but this is another opportunity for people in SA to get involved in the property market.”

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