Journal of Financial Management of Property and Constructionuir.ulster.ac.uk/37346/1/McGreal Stanley...
Transcript of Journal of Financial Management of Property and Constructionuir.ulster.ac.uk/37346/1/McGreal Stanley...
Journal of Financial Managem
ent of Property and Construction
Investor perspectives on property crowdfunding: evidence
from Australia
Journal: Journal of Financial Management of Property and Construction
Manuscript ID JFMPC-12-2016-0055.R3
Manuscript Type: Research Paper
Keywords: Crowdfunding, property investment, investor behaviour, investment decision-making
Journal of Financial Management of Property and Construction
Journal of Financial Managem
ent of Property and Construction
Investor perspectives on property crowdfunding: evidence from Australia
1. INTRODUCTION
Countries in Asia-Pacific have experienced an exponential growth in the alternative finance market. Evidence
presented in the 2016 report Harnessing Potential (Zhang et al., 2016) shows a massive 313% increase in
transaction volume from $272m in 2014 to $1.12bn in 2015 across the region (excluding China). Most of this
growth is attributed to alternative investment platforms in developed countries substantially increasing their scale
of activities, with Australia showing the second highest rate of growth following Japan. While these figures are still
small in terms of the overall investment universe, the rapid growth of alternative investment platforms means that
their role and impact within investment decisions requires analysis and in the context of the built environment, the
positioning of real estate crowdfunding platforms as a sub-set of the alternative finance model is significant.
Indeed, this sector has been to the forefront with real estate crowdfunding platforms in the Asia-Pacific region
(again excluding China) exceeding all other alternative investment platforms in terms of the amount raised
($855,182) in 2015 (Zhang et al., 2016), although the report recognises that Australia has been a late adopter of
equity-based real estate crowdfunding regulation. Hence research into the Australian real estate crowdfunding
market is timely in particular exploring crowdfunding investor behaviour and rationale.
The principle of crowdfunding is not new and has been applied, in concept, for centuries. Hemer (2011) states
that both Mozart and Beethoven funded projects in the eighteenth century with contributions from interested
parties. Furthermore, one of the world’s most famous sites, the Statue of Liberty in New York, had its pedestal
funded by more than 125,000 contributors, some of whom donated less than USD 1 to the project (Moreno,
2004). However, the term “crowdfunding” has only recently been developed. In August 2006, Michael Sullivan
coined the term “crowdfunding” when creating Fundalog, a US internet based crowdfunding financing platform
(Gass, 2011). Yang and Zhang (2016) observe that China entered the crowdfunding industry as recently as 2014,
while in Europe, crowdfunding is developing rapidly with Austria, Spain, France, the United Kingdom, Italy,
Germany and Portugal all having bespoke regimes for investment-based crowdfunding (European Commission,
2016). Indeed, the UK government’s Green Paper on Building our Industrial Strategy (HM Government, 2017)
has identified the potential of crowdfunding as a means of accessing capital for growing companies.
Whilst the concept of crowdfunding is expanding at a rapid pace, the property/real estate investment literature on
crowdfunding is to a large extent silent. The term ‘real estate crowdfunding’ has not been defined in academic
literature to date and empirical research is scarce. Cohen (2016) states that the future for real estate
crowdfunding holds the opportunity for significant growth, but also includes powerful risks. Moreover, the
uncertainty gap between possible benefits and pitfalls is widened due to a lack of knowledge with the possibility
Page 1 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
that crowdfunding, and in particular crowdfunding as property investment vehicle, could be the next best
investment phenomenon or alternatively present a uniformed gamble.
This study contributes to investment decision-making by exploring crowdfunding platforms, from an investor
perspective. The key factors that are essential to understanding investment decisions are the same as those
using more established investment vehicles namely risk, return, liquidity, investment time horizons and
information availability. The originality of this study stems from being amongst the first to investigate property
crowdfunding from an investor perspective and indeed the first in an Australian context. Investment fundraising
through digitalised platforms, the growing means thereof, and its application to real estate is particularly novel
from an investor perspective and understanding the reasons why individual investors are seemingly attracted to
such an investment medium. Hence, given the phenomenal growth of alternate investment platforms and their
current upward trajectories in capturing investment funds, this paper, in seeking to improve the knowledge base
on property crowdfunding, is thus innovative and makes a significant contribution to the literature in terms of
focussing on individual investor behaviour, decisions and profile. The specific aim of this study is to investigate
the perceptions of property investors of the risks and rewards of crowdfunding as an investment vehicle in
Australia. More specifically, the study seeks to answer the following questions:
• What are property investors’ expectations of property crowdfunding in relation to their gender, age and
investor type?
• How do property investors perceive risk in property crowdfunding in relation to their gender, age and
investor type?
• What level of financial knowledge do crowdfunding property investors show regarding investment
decision-making in relation to their gender, age and investor type within the context of their investment
history?
In seeking to address the aim of the study and specific research questions, Section two of the paper provides a
review of recent literature on crowdfunding, specifically in relation to property, followed in Section three by a
focus on the Australian perspective. Section four of the paper develops the research method, including the
application of survey-based techniques. The empirical section of the study, Section five, provides an analysis of
the results based on a survey of crowdfunding investors exploring themes based around investment history and
expectations, risk and investment. Conclusions, in Section six, focus on demographics and gender impacts on
investment decisions, return expectations and risk tolerances, and the level of financial knowledge/expertise in
influencing investment behaviour.
Page 2 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
2. CHARACTERISTICS OF CROWDFUNDING: LITERATURE EVIDENCE
Crowdfunding has been defined by a number of scholars. Sigar (2012) defines crowdfunding as “a fundraising
strategy that pools capital, typically in small amounts, from a large group of people”, whilst Ramsey (2012) states
that crowdfunding is “the process of raising money to help turn promising ideas into business realities by
connecting investees with potential supporters.” Equity crowdfunding is defined by Ahlers et al. (2015) as “a
method of financing, whereby an entrepreneur sells a specified amount of equity or bond-like shares in a
company to a group of (small) investors through an open call for funding on Internet-based platforms.”
Valanciene and Jegeleviciute (2013) argue that, in order to gain an understanding of the factors influencing
crowdfunding investor decision-making, it is important to explore the main drivers of risk and return (as well as
opportunities and weaknesses) for crowdfunded investments. These risks include weaker protection of the
investor, the possibility of fraud, as well as a lack of financial advice as funds are invested online. On the other
hand, the benefits and opportunities to investors may include the ability to invest in assets (particularly property in
the case of this study) which the investor previously would not be able to afford in their personal capacity.
The basic structure of a real estate investment through equity crowdfunding involves a special purpose vehicle
(SPV) that allows individual investors to pool their investments. The SPV obtains ownership of the investment
and shares are issued to individual investors on a pro rata basis. Investors are rewarded through distribution of
dividends as well as potential capital growth of the investment. The SPV is managed by the crowdfunding
platform. The crowdfunding platform is also responsible for finding the sponsor (or real estate asset), performing
the necessary due diligence and the listing of the property (O’Roarty et al., 2016).
In equity-based crowdfunding the probability of success of such an investment is increased by retention of equity,
but also by ensuring that sufficient information is available with regards to the risk of the investment. Significantly,
factors that motivate investment in real estate crowdfunding include low entry levels, greater investment
discretion as well as lower fee structures and attractive returns. It is however important to understand what drives
the investor’s decisions to invest, as it will be the determining factor that will drive change (O’Roarty et al., 2016).
According to Ahlers et al. (2015) information asymmetries between the crowd funder and the investor can make
the equity-based crowdfunding investment process more challenging as individual investors have limited
information on the companies they invest in. Hervé et al. (2017) state that investment based crowdfunding, which
includes equity crowdfunding and real estate crowdfunding, will differ from other forms of crowdfunding as the
incentives and compensation is different for the investor.
The difference in regulation and specific structuring of equity-based crowdfunding investments between countries
can increase the perceived risk. Belleflamme et al. (2014), for example, state that equity offerings in Europe are
Page 3 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
limited to public listed entities with stringent regulation, however, profit sharing can be structured as the sharing of
gains on a predetermined basis. Furthermore, Agrawal et al. (2015) consider that another possible challenge
could be the geographical distance between the location of the investor and the crowdfunded project. Risk may
also increase due to the lack of knowledge as to what happens post investment, reducing the transparency of
such a crowdfunding vehicle. Indeed, Macht and Weatherstone (2015) point out that literature on the post-
investment phase of equity-based crowdfunding investment is scarce. Furthermore, Borello et al. (2015) point
out that the main limitation relating to empirical literature on crowdfunding is the fact that the availability of public
data on projects seeking funds is limited. In contrast mainstream investor behaviour in property investment
decision-making has received considerable attention in the literature. For example Case and Shiller (1988)
investigate buyer behaviour in boom and post-boom residential property markets. Levy and Lee (2004) and Levy
et al. (2008) qualitatively investigate family decisions and emotions in making home purchasing decisions.
MacCowan and Orr (2008) studies the behavioural decision-making process by property fund managers in
disposing of assets where Lowies et al.(2016) examines heuristic-driven bias present in the decisions of listed
property fund managers.
In relation to property crowdfunding investors, a study by Pearson et al. (2016) on equity-based crowdfunding
identified significant differences between investor motivation by age, gender and investor experience. Barber and
Odean (2001), in an earlier study, found that whilst both men and women are overconfident as far as investing is
concerned, this is more pronounced in the case of male expectations that investments will yield positive results.
In a similar vein, Hervé et al. (2016) found that the clear majority of equity crowd funders are male, with the
largest proportion of investors being below the age of 55. Furthermore, Cholakova and Clarysse (2015) consider
that a record of having invested in equity crowdfunding investments is a positive indicator for continued
investment, reiterating the importance of equity crowdfunding as a form of financial motivation to invest in this
vehicle. This finding is in accordance with Nicolosi et al. (2009) who found that individuals learn from their
investment history and base future decisions on the past performance of stocks in order to achieve higher returns
as they gain experience.
Regarding risk and risk tolerance, Hallahan et al. (2004) argue that intuitively investors should become more risk
averse as they become older. Therefore, their investment horizon may be shorter, their earning capacity might
decrease as they reach retirement age and they might not want to take undue risks with their savings. Wang and
Hanna (1997), however, found that risk aversion decreases as people age, with older investors having a higher
risk tolerance than younger investors. These findings are also in line with those of Grable (2000) who concluded
that older investors are more risk tolerant than younger investors, and with Hervé et al. (2016) who found that
men present more risky investment behaviour in equity-based crowdfunding. Concerning the financial knowledge
of investors in equity-based crowdfunding, Volpe et al. (2002) observed that older investors (above the age of 50)
Page 4 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
were more knowledgeable than younger investors. In particular, these authors argued that older investors have
built up financial knowledge throughout the years and therefore feel more confident about their investment
decisions. Volpe et al. (2002) also found that the levels of investment knowledge is lower for women as opposed
to that of men.
Although gender, age and investor type studies have been undertaken in the broad equity-based crowdfunding
area, to date property crowdfunding as an equity-based investment vehicle with a focus on the investor has not
been investigated. Furthermore, the literature suggests conflicting findings on return expectations, risk tolerance
and financial knowledge, in a broad equity-based approach which is further accentuated for equity-based
property crowdfunding.
3. CROWDFUNDING IN AUSTRALIA
The total volume of crowdfunding on a global base has increased from USD 2.7 billion in 2012 to USD 34.40
billion in 2015. Although Oceania (which includes both Australia and New Zealand) takes only 0.2% of the global
market share (Figure I), annual growth in Oceania for 2015 was 59% providing an indicator of strong future
prospects. In contrast, in the United States (US) (Figure II) both real estate investment crowdfunding and real
estate development crowdfunding were amongst the top 10 industries in committed capital for private
crowdfunding offerings. These two industries contributed 24% of the total amount of capital commitments in
private offerings for the period September 2013 – September 2015 in the US, highlighting the potential of
property crowdfunded investments for countries such as Australia.
<Figure I>
<Total global crowdfunding market share and annual growth prediction (2015) >
<Figure II>
<Top 10 US crowdfunding industries (2013 – 2015)>
The Australian Tax Office (2016) indicates that in Australia there are three parties involved in a crowdfunding
arrangement; the promotor, the intermediary and the contributor. The promotor is the initiator of the project and is
the party who is in need of capital contributions in order to fund a specific project. Intermediaries act as a platform
to link promoters and contributors. Contributors can be either individuals or entities that will commit to contribute
to the project. For contributors any return earned from the crowdfunding investment may form part of their
assessable income for tax purposes.
Page 5 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Four crowdfunding models exist in Australia. In donation based crowdfunding the contributor will not receive any
benefit or reward in return for their contribution, whereas in reward-based crowdfunding the contributor will be
rewarded in some way. Debt based crowdfunding is basically the same as a loan that needs to be repaid
(including capital as well as interest repayments). In an equity-based crowdfunding transaction, contributors
receive shares or equity in the business that act as the promotor. The Australian Government has not finalised
legislation in equity crowdfunding for both public as well as proprietary companies, hence crowdfunding is
currently available in limited circumstances (Australian Tax Office, 2016).
Property crowdfunding is one of the limited equity-based crowdfunding options available in Australia and has not
had the same traction as other property investment vehicles such as Australian Real Estate Investment Trusts
(A-REITs). This is mainly because of the infancy of property crowdfunding as an investment vehicle in Australia.
By way of contrast, Newell (2013) has discussed how A-REITs attract both sophisticated individual and
institutional investors that have access to high quality commercial property assets. In property crowdfunding,
investors invest individually and mainly in smaller residential assets. The magnitude of property crowdfunding
investments are also much smaller than that of average A-REIT investments due to a possible lack of
sophisticated institutional investors. As such, property crowdfunding as an investment vehicle is currently used on
a much smaller scale than other indirect property investment vehicles. However, Raskin (2013) observes that a
property crowdfunded investment allows the investor the opportunity to be more in control, and more aware, of
the risks associated with property crowdfunding.
4. RESEARCH METHOD
The study followed a survey-based design and data were collected by means of an online questionnaire. The
survey was targeted at investors that have invested funds in property through a crowdfunding platform based in
Australia. The purpose of the questionnaire was to determine the perceptions of this target group regarding
property crowdfunding as an investment vehicle. Specifically, information was gathered on the following aspects:
• demographics, in particular gender, age and investor type;
• investment history as well as return expectations of property crowdfunding as an investment vehicle;
• risk perceptions and financial risk tolerance concerning a property crowdfunded investment; and
• financial knowledge of the specific target group and how it influences their investment decision-making
process.
An online questionnaire was chosen as the research tool as it is time-effective, convenient and minimises cost
(Evans and Mathur, 2005; Wright, 2005). A preliminary questionnaire was designed to obtain sufficient
information to draw conclusions in respect of investor perceptions, using property crowdfunding as an investment
Page 6 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
vehicle. A pilot study was conducted to pre-test the effectiveness of the questionnaire and to enhance its
robustness.
The first section of the questionnaire required respondents to supply demographic information to be used in the
final analysis. It included closed-ended questions on the gender, age, household income per annum, and highest
academic qualification. This demographic information is needed to measure investor perspectives.
The second section of the questionnaire requested respondents to provide information regarding their current
investment portfolio and investment history, as well as return and ownership expectations. The third section
considered the availability of information to property crowdfunding investors, whilst the fourth section examined
the respondents’ attitudes towards financial risk. In the fifth and final section respondents’ degree of financial
knowledge and their investment time horizon were established.
Sections 2 to 5 of the questionnaire are central to the measurement of the perceptions of property crowdfunding
investors on this alternative investment vehicle. Hence, specific questions were designed based on the review of
the related literature to ensure validity within the context of this study and associated research questions.
According to Burns and Bush (2010), the collection of primary data for academic purposes is achieved through
experiments, observations and surveys. Unlike experiments or observations where the characteristics under
observation are known in advance, a survey focusses on the unknown characteristics of a particular population.
Saunders et al. (2007) explain that the use of questionnaires in descriptive research that investigates attitudes,
opinions and the decisions that humans make, enables researchers to identify and describe important variations
in decision making.
In the property investment paradigm, authors such as French (2001), Gallimore and Gray (2002) and MacCowan
and Orr (2008) have conducted studies using survey-based techniques as a basis for obtaining the necessary
data to explore decision-making processes and behaviour. Important deductions concerning property investment
decision-making have been made in these studies using questionnaires as instruments to gather data.
The target cohort is focussed on property crowdfunding as the specific investment vehicle, thereby adding to the
reliability of the sample. To further ensure robustness of the questionnaire it was initially send to experts at the
crowdfunding platform for validation and comments. Thereafter a pre-test was conducted to further strengthen
the questionnaire.
This study uses statistical analysis through the Chi-square test and independent sample t-test. The Chi-squared
test, through cross-tabulation, is used in instances where the data presented is in nominal or ordinal format whilst
the independent sample t-test is used for categorical and ratio data and to determine significant differences in
Page 7 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
means between two independent groups. Studies by McLachlan and Gardener (2004) and Barber et al. (2003)
have successfully applied t-tests as an analytical method to test for various investor differences in investment
decision-making.
Currently there are two significant property crowdfunding platforms in Australia of which only one has a property
only crowdfunding focus. To limit the possibility of including respondents other than actual property crowdfunding
investors, the questionnaire was distributed by the property only crowdfunding platform, to their investor
database. At the time of conducting the survey the crowdfunding platform had 780 registered persons, and whilst
detailed information on the numbers who had actually invested is not available the platform estimates that there
is a high rate of involvement (90%) resulting in a population of circa 700 eligible investors. In determining a
statistically valid sample size survey methodologies recommend using either some known information or the
results of a pilot study that map to an important issue in the survey. For this investigation the former is used
drawing upon information from the Harnessing Potential Report (Zhang et al., 2016) concerning the percentage
of female participation1 (33%) in real estate crowdfunding platforms in the Asia Pacific region. Utilising the
binomial formula for sample size determination2, a 0.05 probability level and allowing a 10% error margin on
female participation, a desired sample size of 76 respondents is derived.
In conducting the survey, the initial distribution of the questionnaire was followed up by one reminder resulting in
in 89 responses, or 12%, which is in line with adequate response rates for online surveys (Nulty, 2008; Sax et al.,
2003) and exceeds the theoretical desired sample size of 76. However, through the data cleansing process, a
number of incomplete surveys were eliminated bringing the useable sample to 62 responses. The small sample
size does render the statistical measures applied less powerful, and caution was therefore applied in interpreting
some of the results. To eliminate response bias, every respondent was approached in the same manner and
presented with the same set of questions. The response was therefore considered to be acceptable and
statistically representative of the platform population. Also, in context of this study it is not the goal to generalise
conclusions to the greater crowdfunding population, as the focus is specifically on property crowdfunding
investors within Australia, their attitudes to risk, and expectations of return levels.
5. ANALYSIS
1 The first question of the platform survey addressed gender participation.
2 ���� �(��)
�� where z=1.96, p=67% and M the error margin of 10%
� �
�
��(�/�)
finite population correction where n0 is the final sample size and N the population
Page 8 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
The analysis establishes core characteristics of the data and the nature of the statistical distributions of key
variables supported by a range of significance tests to explore differences by respondent sub-groups, in
particular gender, age and investor type3. As articulated in this paper, there is little information on crowdfunding in
the research literature, particularly in the case of property crowdfunding. Hence establishing patterns in the
underpinning data set forms a core part of the study.
5.1 Demographic characteristics
The analysis shows a strong gender bias in the investor cohort with 72.6% of the respondents being male, raising
questions concerning information asymmetry, IT capabilities/exposure, and different levels of potential risk
appetite. The majority of respondents in the survey are aged above 45 years with the largest cohort (32.3%)
between the ages of 55 to 64 years, suggesting that it is the older age groups in society - potentially those with
more disposable income or higher levels of wealth - who are most willing to invest in a crowdfunding platform.
This is partly supported by the income profile with respondents indicating that they mostly earn a combined
household income of AUD200,000 or less, with 45.2% of respondents earning AUD100,000 or less and 42% of
respondents earning between AUD100,000 and AUD200,000. The data also shows that 27.4% of respondents
holds a diploma or certificate (non-university), 25.8% secondary school education, another 25.8% a postgraduate
qualification, and 21% an undergraduate university qualification.
5.2 Respondent investment history and expectations
Analysis of the respondents’ investment history considers the amount of funds, and the percentage of the
respondents’ total investment portfolio, invested in property through crowdfunding platforms. It also includes the
percentage of the portfolio invested in different asset classes, respondents’ return expectations, as well as
investment time horizon, for property crowdfunding as an investment vehicle.
The majority of respondents (80.6%) indicated that their investment in property through a crowdfunding platform
was not their first financial investment. This suggests they are looking for alternative investment opportunities,
possibly due to low interest rates making other, more traditional investment routes, less attractive. In exploring
investor characteristics it is apparent that, for an appreciable percentage (circa 20% of respondents),
crowdfunding was their first financial investment. This infers that this vehicle has the ability to attract a range of
investors, including individuals with no investment history. Reflecting on this potential range of investor type, it is
of particular interest that three quarters (75.8%) of respondents invested an amount of less than AUD10,000
through a crowdfunding platform. In relation to other investment asset classes, stocks (35.1%) were the main
3 All statistical testing is within the statistical band and it can be prone to Type I and II errors when the wrong
decisions are made.
Page 9 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
investment product within respondent portfolios’ with 33% held in other assets, 29% in cash and only 3% in
bonds. Importantly, 74.2% of respondents found that the ease of access to a property crowdfunding platform
assisted positively in making their investment decision.
The return expectations of the respondents were fairly evenly split between the “less than 5%” and the “6% -
10%” options (41.9% and 48.4% respectively) suggesting that a moderate or realistic level of return was sought
rather than higher return rates associated with asset classes such as private equity. An interesting exposure to
rural property rather than other property types in realising this return was apparent though, as respondents were
sampled from one crowdfunding platform only, this outcome may present bias to the property types selected by
this crowdfunding platform. Other sectors that respondents indicated they invest in were commercial property
(27.4%), residential property (25.8%), industrial property (12.9%), and mixed-use property (12.9%).
The analysis infers that respondents take a long term view with 77.4% expecting future ownership and returns
based on capital growth as well as rental income, rather than capital growth or rental yield only, and divesting
after the completion of construction or short term speculation. This long term view is further substantiated by the
finding that 72.6% of respondents expect a long term investment time horizon of longer than 5 years.
5.2.1 Analysis by gender, age and investor type
Analysis by gender (Table I) indicates that female respondents, on average, invest more than male respondents,
as reflected in the higher mean for funds invested through property crowdfunding platforms (AUD16,323.53
against AUD13,485.18). However, while an interesting and somewhat surprising statistic, the difference in means
is not statistically significant (p>0.05).
<Table I>
<Statistics on funds invested and percentage of portfolio invested through property crowdfunding platforms>
Regarding age (Table I), those respondents less than 55 years of age (dominated by those aged between 45 and
54) invested, on average, more funds in the property crowdfunding platforms than those aged 55 or older
(AUD15,210.13 against AUD13,705.13). The latter, though, holds a higher percentage invested in property
through crowdfunding platforms (24.5% against 14.9%). In the case of investor groups, unlike the age and
gender cohorts, the difference of the means for funds invested through property crowdfunding platforms by
investor type is statistically significant (p<0.05; equal variances not assumed). Furthermore, the difference in
means for the percentage of funds invested through property crowdfunding platforms is statistically significant at
Page 10 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
the 90% confidence level (equal variances not assumed). Drilling down further into the data, new investors
(property crowdfunding as first ever financial investment) seemingly invest much smaller amounts on average
(AUD5,986.08) than existing investors (AUD16,250). This could possibly be because of the uncertainty attached
to a new investment vehicle, but are more likely caused by uncertainty and a lack of knowledge in making
investments. Although new investors invest a higher percentage of their funds in property through property
crowdfunding (42.4% as per Table I), their portfolio is smaller relative to existing investors, with the latter only
investing 15.8% of their portfolio in property through property crowdfunding platforms.
Concerning exposure to other asset classes, the analysis shows some behavioural differences by gender group
(Table II), with female respondents (45.7%) holding a higher percentage of their portfolios in cash than males
(22.7%), whereas male respondents have a higher percentage of their portfolios in stocks (43.1%) than females
(13.8%). In this context, the higher exposure of females to property crowdfunding as an investment vehicle
(although not statistically significant) might be related to their higher level of cash liquidity and hence the
opportunity to invest in alternative vehicles, whereas male respondents follow a more traditional investment
approach by investing significantly higher percentages into stocks.
A study by Hervé et al. (2017) in France produced similar results with women making larger investments than
men, but in less risky projects (such as real estate). According to these authors, the results are based on risk
aversion rather than overconfidence as such. However, investments decisions are influenced to a larger extent
by risk preferences and the return expectations, and not by gender.
<Table II>
<Statistics on percentage of portfolio invested in asset classes>
The analysis indicates that older respondents (55 years and older) hold more cash (34.7%) in their portfolios
relative to those respondents less than 55 years of age (19.3%). They also invest seemingly a lower percentage
(26.7%) in other asset classes than those aged below 55 (43.7%). Given their later stage in life, it is possible that
older respondents invest in cash and cash equivalents for liquidity purposes but also for the conservative nature
of this type of investment. Similarly, the older respondents may invest less in risky investment alternatives
whereas the “less than 55 year” respondents possibly have a higher proportion of their portfolios in higher risk
and alternative investment vehicles.
Page 11 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Concerning return characteristics, the analysis (Table III) indicates that low and moderate expectations are
apparent across the gender, age and investor groups, with little evidence of any major differences by sub-group.
However, at the 0.1% significance level some differences between respondents’ age and their return
expectations are apparent. Here, 94.7% of respondents in the “55 years and above” age group, and 78.3% in the
“less than 55 years” age group, expects low to moderate returns ranging from 0% to 10% per year. Overall it may
be deducted that respondents, especially by age group, do not perceive property crowdfunding as an
exceptionally high earning investment vehicle. Rather, they consider it as a low to moderate earner over a longer
time period.
<Table III>
<Property crowdfunding return expectations (%) and investment time horizon on an annual basis in relation to respondents’ gender, age and investor type>
5.3 Risk
The survey sought to test respondents’ attitude to financial risk tolerance as well as their perception of the risk
attached to investing in property through a crowdfunding platform. For the former, a risk tolerance scale
developed by Grable and Schumm (2007) was used to test risk appetite. Similarly, respondents’ perceptions of
the level of financial risk attached to the property crowdfunding vehicle in relation to gender, age, and investor
type is tested.
With regard to risk, 58.1% of respondents showed a willingness to take “average” financial risks, thereby
expecting “average” returns in making investments as measured on the risk tolerance scale. However, almost
30% of respondents are willing to take “above average” risk, expecting “above average returns”, indicating a
spread of risk appetite amongst respondents. Similarly, the majority of respondents (64.5%) view the level of risk
associated with a property crowdfunded investment as average, whereas 22.6% of the respondents are of the
view that the level of risk associated with a property crowdfunded investment is high. Overall the level of risk
associated with a property crowdfunded investment appears to be in line with rational return expectations and, in
this respect, does not show any difference in risk attitude from that expected for more conventional investment
vehicles.
5.3.1 Analysis by gender, age and investor type
Page 12 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Sub-group analysis (Table IV) suggests that statistically significant relationships exists between respondents’ risk
appetite and both age and investor type (p<0.05). More specifically, respondents seem to be more risk averse in
relation to their age and their investor type (67.7% for both variables). Regarding age it is clear that the “55 years
and above” group are more cautious in tolerating financial risk, with 79.5% of this age group indicating that they
are risk averse. For the “less than 55 years” age group the spread in risk appetite is more even between risk
taking and risk averse (52.2% against 47.8% respectively). Respondents in this age group seems willing to take
on risky alternative investments. In contrast, the older, more mature investor group allocate less money to risky
alternative assets and hold more funds in cash and cash equivalent investments.
<Table IV>
<Respondents’ risk appetite in relation to their gender, age and investor type>
According to Mohammadi and Shafi (2016) differences in investment behaviour between men and women are
due to risk preferences. The authors consider that investments in equity crowdfunding have two distinct
characteristics, being: decision making under high risk circumstances, and uncertainty which is increased due to
limited investor expertise. Examining attitudes somewhat deeper suggests that existing investors generally tend
to be risk averse (62%), though an appreciable number (38%) are willing to tolerate higher risk levels. In contrast,
91.7% of new investors are risk averse with a very small percentage willing to take higher risk opportunities.
These lower levels of risk tolerance presented by new investors may also explain their propensity to hold less
money in stocks, and although not significant, more money in cash.
5.4 Investment decision-making and financial knowledge
An investment decision confidence scale developed by Li et al. (2002) was used to measure respondents’
confidence levels in making investment decisions. The findings indicate that respondents are sure (41.9%) about
the investment decisions they make, that they are comfortable (37.1%) with the concept of risk, and are confident
(46.8%) in making investment decisions. However, 33.9% of respondents “agree” or “mostly agree” that they are
uncomfortable with the concept of risk in making investment decisions. Furthermore, over a third of respondents
are “neutral” in terms of their confidence in making investment decisions.
Regarding financial knowledge, using a scale developed by Flynn and Goldsmith (1999), the analysis indicates
that respondents have a reasonable degree of knowledge (Table V) across key financial concepts such as
interest rates, finance charges, credit terms, credit ratings, credit files and managing finances, and investing
money. However, when it comes to information in their credit report, as indicated by the lower mean score and
Page 13 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
higher value of standard deviation, respondents are less confident and hence may have been attracted to
crowdfunding given the seemingly greater simplicity with its investment style.
<Table V>
<Respondents’ mean scores on financial knowledge variables>
5.4.1 Analysis by gender, age and investor type
Exploring this further by sub-group analysis suggests no significant difference by gender, although age does
seem to influence respondents’ level of confidence in investment decision-making (p<0.05). The analysis
indicates that, overall, 61.3% of respondents agree that they are confident in making investment decisions.
However, the “less than 55 years” age group do so to a much lesser extent. The differing attitude by age group
captures the greater uncertainty felt by new investors, 66.7% of whom feel uncomfortable with the risks
associated with investment decision-making. In this respect it seems that respondents in the “new investor”
category lack financial knowledge, with the analysis indicating that respondents in this category have a limited
knowledge of financial concepts, relative to the “existing investor” category who indicate that they are
“knowledgeable” in each of the financial concepts listed. Overall new investors feel that they have a limited
financial knowledge (which explains why they feel uncomfortable with the risks associated to investment
decisions-making), they are risk averse in tolerating financial risk, invest less in stocks as an asset class, and
invests significantly lower amounts in property through crowdfunding platforms, than existing investors.
Although no significant difference by gender is apparent in the level of confidence in investment decision making,
a high percentage of female respondents feel that they have limited knowledge (58.8%) on investing money. This
perhaps, explains the greater tendency by females to hold a significantly higher percentage of money in cash
than male respondents, and significantly lower percentages in stocks relative to male respondents. It is also in
line with Hervé et al. (2017) who found that women invest least in risky investments, but more in safer ones.
Based on a study by Mohammadi and Shafi (2016) female investors are more risk averse than men, based on
the fact that they are less likely to invest in young firms, high-technology firms as well as firms offering a high
percentage of equity. It is therefore probable that, although females might feel confident in making investment
decisions, this level of confidence may be in more conservative investments such as cash and cash equivalents.
6. CONCLUSION
The aim of this study is to investigate the perceptions of property investors of the risks and awards of property
crowdfunding as an investment vehicle in Australia. More specifically it focusses on property investors’
Page 14 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
investment history, return expectations, risk perceptions and tolerance, and the level of financial knowledge in
making investment decisions. In this respect, the study is innovative and breaks new ground in assessing
individual investor motivations and appetite in relation to the growing concept of crowdfunding and its potential as
an alternative investment means of entering the real estate investment market.
The study shows that Australian investors perceive property crowdfunding as a relatively low to medium risk
investment that yields low to medium return over a medium to long-term investment horizon. Significantly, the
analysis shows that property crowdfunding attracts a mix of investor types, rather than a highly specialised
cohort, with the main appeal to this spread of investors being the ease of entry and the ability to invest small
amounts of money. The study shows that Australian investors have a reasonable degree of financial knowledge
but are more neutral about their confidence in relation to making investment-decisions.
An important finding of the analysis is gender differences towards investments in general and property
crowdfunding in particular. The results show that female respondents invest more funds through and have a
higher exposure to property crowdfunding than male respondents although, as discussed, not significantly
different within the margins of statistical error. Female respondents are shown to hold higher percentages of cash
in their portfolios while male respondents invest higher percentages in stocks. This variation in respondent
behaviour is of importance and suggests that female investors have more liquid cash assets looking for a
relatively un-complex and easy investment vehicle with property crowdfunding presenting one such possibility.
The analysis also shows some important differences by age. In this context, younger investors hold more funds in
property crowdfunding than older investors. In contrast, older respondents have a greater propensity to hold
significantly higher percentages of their portfolios in cash and given their life stage, invest more conservatively
through cash and cash equivalents, and in more liquid investment vehicles.
The findings by investor type indicate that new investors tend to expose smaller amounts than existing investors,
possibly because of uncertainty and a lack of knowledge in making investment decisions. This observation is
substantiated by the fact that existing investors, arising from a higher level of confidence, invest significantly more
funds through traditional investment vehicles such as stocks.
Similar to the findings of Hallahan et al. (2004) the present study shows that investors become more risk averse
as they become older whereas younger investors present a willingness to take more risk. Furthermore, both
existing and new investors tend to be more risk averse with low to moderate return expectations. It also seems
that investors perceive property crowdfunding as a long-term investment. However, in line with the results of
Volpe et al. (2002) the present study shows that younger respondents are less confident in making investment
decisions than older, more experienced respondents. Furthermore, new investors display less financial
Page 15 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
knowledge than the existing investor cohort, suggesting that they are uncomfortable with making investment
decisions relative to their existing investor counterparts.
The results of the study show, to an extent, similarities to general equity-based crowdfunding studies. However,
the uniqueness of property as crowdfunding vehicle may explain why these results did, in certain cases, become
insignificant when related to other studies. Overall, the study shows that the property crowdfunding investor
seems to present cautious behaviour with a conservative perception of investment in property through
crowdfunding platforms. Limited financial knowledge as well as uncertainty towards making investment decisions
may present barriers to younger, newer investors.
The knowledge gained from this study on investors implies that the acceptance of digitalised investment
platforms may be lagging behind the rapid pace at which technology is changing the investment decision-making
environment. This is an important finding with consequences for the pace of development of financial vehicles
and public acceptance. There is also an inference concerning the need for a greater understanding of the
possibilities that changes in technology brings and, ultimately, how it influences investment decisions. In this
regard, property crowdfunding platforms may need to provide prospective investors with more information on how
property crowdfunding as an investment vehicle functions, given that transparency is central to most investment
decisions. Associated with this is the degree of regulation within the crowdfunding sector and enhancing the
understanding of alternative investment vehicles to close the gap between advancement and acceptance.
Although this study is focused on Australian investors, many of the findings regarding how investors perceive
change, adapt to technologies and embrace new investment vehicles with caution4 does have resonance to
other countries.
7. REFERENCES
Agrawal, A., Catalini, C. and Goldfarb, A. (2015), ‘Crowdfunding: Geography, social networks, and the timing of
investment decisions’, Journal of Economics & Management Strategy, Vol. 24, No. 2, pp. 253 – 274.
Ahlers, G.K.C, Cumming, C., Günther, C. and Schweizer, D. (2015), ‘Signalling in Equity Crowdfunding’,
Entrepreneurship Theory and Practice, July 2015, pp. 955 – 980.
Australian Tax Office (2016), “Crowdfunding”, available at: https://www.ato.gov.au/Individuals/Income-and-
deductions/Income-you-must-declare/Crowdfunding/ (accessed 21 September 2016).
4 To obtain a copy of the questionnaire sent to investors please contact the lead author.
Page 16 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Barber, B.M. and Odean, T. (2001), “Boys Will be Boys: Gender, Overconfidence, and Common Stock
Investment”, The Quarterly Journal of Economics, Vol. 116, No. 1, pp. 261 - 292.
Barber, B.M., Heath, C. and Odean, T. (2003), “Good Reasons to Sell: Reason-Based Choice Among Group and
Individual Investors in the Stock Market”, Management Science, Vol. 49, No. 12, pp. 1636-1652.
Belleflamme, P., Lambert, T. and Schwienbacher, A. (2014), ‘Crowdfunding: Tapping the right crowd’, Journal of
Business Venturing, Vol. 29, pp. 585 – 609.
Borello, G., De Crescenzo, V. and Pichler, F. (2015). “The funding gap and the role of financial return
crowdfunding: Some evidence from European platforms”, The Journal of Internet Banking and
Commerce, 2015.
Burns, A.C. and Bush, R.F. (2010), “Marketing research”, 6th ed. Upper Saddle River, NJ: Prentice Hall.
Case, K.E. and Shiller, R.J. (1988), “The behaviour of home buyers in boom and post-boom markets”, New
England Economic Review, November/December, pp. 29 – 46.
Cholakova, M. and Clarysse, B. (2015), “Does the Possibility to Make Equity Investments in Crowdfunding
Projects Crowd Out Reward-Based Investments?,” Entrepreneurship Theory and Practice, January
2015, pp. 145 – 172.
Cohen, J. (2016), “A Study on the History and Functionality of Real Estate Crowdfunding”, Joseph Wharton
Research Scholars. Available at http://repository.upenn.edu/joseph_whraton_scholars/19
Crowdexpert (2015), “Crowdfunding Industry Statistics 2015”, available at: http://crowdexpert.com/crowdfunding-
industry-statistics/ (accessed 26 September 2016).
European Commission (2016), “Crowdfunding in the EU Capital Markets Union”, Commission staff working
document, European Commission, Brussels, 3 May.
Evans, J.R. and Mathur, A. (2005), “The value of online sur6veys”, Internet Research, Vol.15, Issue 2, pp. 195 -
219.
Flynn, L.R. and Goldsmith, R.E. (1999), “A short reliable measure of subjective knowledge”, Journal of Business
Research, Vol 46, September 1999, pp. 57 - 66.
French, N. (2001), “Decision theory and real estate investment: an analysis of the decision-making processes of
real estate investment fund managers”, Managerial and Decision Economics, Vol. 22, pp. 399 - 410.
Page 17 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Gallimore, P. and Gray, A. (2002), “The role of investor sentiment in property investment decisions”. Journal of
Property Research, Vol. 19, No. 2, pp. 111 - 120.
Gass, D. (2011), Crowd Funding: How to Raise Money with the Online Crowd, Jump Profit, Inc., Las Vegas, NV.
Grable, J.E. (2000), “Financial risk tolerance and additional factors that affect risk taking in everyday money
matters”, Journal of Business and Psychology, Vol.14, No. 4, pp. 625 - 630.
Grable, J.E. and Schumm, W. (2010), "An estimate of the reliability of the survey of consumer finances risk-
tolerance question”, Journal of Personal Finance, Vol. 9, pp. 117 - 131.
Hallahan, T.A., Faff, R.W. and McKenzie, M.D. (2004), "An empirical investigation of personal financial risk
tolerance", Financial Services Review, Vol. 13, No. 1, pp. 57 - 78.
Hemer, J. (2011), ‘A snapshot on crowdfunding’, Working Paper Firms and Regin Nr R2/2011, Fraunhofer.
Hervé, F., Manthé, E., Sannajust, A. and Schwienbacher, A. (2017), “Determinants of Individual Investment
Decisions in Investment-Based Crowdfunding”, available at: https://papers-ssrn-
com.access.library.unisa.edu.au/sol3/Delivery.cfm/SSRN_ID2746398_code301672.pdf?...1
Hervé, F., Manthé, E., Sannajust, A. and Schwienbacher, A. (2016), “Investor Motivations in Investment-Based
Crowdfunding”, Available at SSRN: https://ssrn-com.access.library.unisa.edu.au/abstract=2746398
HM Government (2017) Building our Industrial Strategy, HM Government, pp132.
Levy, D.S. and Lee, C.K.C. (2004), “The influence of family members on housing purchase decisions”, Journal of
Property Investment and Finance, Vol 22, pp. 320 – 338.
Levy, D., Murphy, L. and Lee, C.K.C. (2008), “Influences and Emotions: Exploring Family Decision-making
Processes when Buying a House”, Housing Studies, Vol 23, No. 2, pp. 271 – 289.
Lowies, G.A., Hall, J.H. and Cloete, C.E. (2016), “Heuristic-driven bias in property investment decision-making in
South Africa”, Journal of Property Investment and Finance, Vol 34, No. 1, pp. 51 – 67.
Li, Y.M., Lee, J. and Cude, B.J. (2002), “Intention to adopt online trading: identifying the future online traders”.
Financial Counselling and Planning, Vol. 13, No. 2, pp. 49 - 64.
Macht, S.A. and Weatherson, J. (2015), “Academic Research on Crowdfunders: What’s Been Done and What’s
To Come?”, Strategic Change, Vol 24, No. 2, pp. 191 - 205.
Page 18 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
MacCowan, J.R. and Orr, A.M. (2008), “A behavioural study of the decision processes underpinning disposals by
property fund managers”, Journal of Property Investment & Finance, Vol. 26, No. 4, pp. 342 - 361.
McLachlan, J. and Gardner, J. (2004). “A Comparison of Socially Responsible and Conventional Investors”,
Journal of Business Ethics, Vol 52, No.1, pp. 11 - 25.
Mohammadi, A. and Shafi, k. (2016), “Gender differences in the contribution patterns of equity-crowdfunding
investors”, available at: papers.ssrn.com
Moreno, B. (2004), The Statue of Liberty, Arcadia Publishing, Charleston, SC.
Newell, G. (2013), “REITs in Australia: moving forward from the GFC”, in Sotelo, R. and McGreal, S. (Eds), Real
Estate Investment Trusts in Europe: Evolution, Regulation, and Opportunities for Growth, Springer, pp.
69 – 76.
Nicolosi, G., Peng, L. and Zhu, N. (2009), “Do individual investors learn from their trading experience?”, Journal
of Financial Markets, Vol. 12, pp. 317 - 336.
Nulty, D.D, (2008), “The adequacy of response rates to online and paper surveys: what can be done?”,
Assessment & Evaluation in Higher Education, Vol. 33, No.3, pp. 301 – 314.
O’ Roarty, B., McMahon, S., Martin, R., Marx, S. and Craddock, P. (2016), “Real Estate Crowdfunding: Gimmick
or Game Changer?”, Investment Property Forum, pp 27.
Pearson, A., Johdet, J. and Näselius, M. (2016), “Understanding The Crowd – A quantitative study on investor
motivation in equity crowdfunding”, Bachelor degree thesis, Jönköping University, Sweden.
Ramsey, Y.A., (2012), “What the heck is crowdfunding?” Business people, November, pp. 54.
Raskin, M., (2013), “Crowdfunding for Real Estate: Buy a Slice of a Skyscraper”, available at:
http://www.bloomberg.com/news/articles/2013-01-24/crowdfunding-for-real-estate-buy-a-slice-of-a-
skyscraper (accessed 26 September 2016).
Saunders, M., Lewis, P. and Thornhill, A. (2007), “Research methods for business students”, 4th ed. Harlow, UK:
Prentice Hall.
Sax, L.J., Gilmartin, S.K. and Bryant, A.N. (2003), “Assessing response rates and nonresponse bias in web and
paper surveys”, Research in Higher Education, Vol. 44, No. 4, pp. 409 – 432.
Page 19 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Sigar, K. (2012), “Fret no more: inapplicability of crowdfunding concerns in the internet age and the JOBS Act’s
safeguards”, Administrative Law Review, Vol. 64, No. 2, pp. 473 - 506.
Valanciene, L. and Jegeleviciute, S. (2013), “Valuations of crowdfunding: benefits and drawback”, Economics
and Management, Vol. 18, No.1, pp.39 – 48.
Volpe, R.P., Kotel, J.E. and Chen, H. (2002), "A Survey Of Investment Literacy Among Online Investors", Journal
of Financial Counselling and Planning, Vol. 13, No. 1, pp. 1 - 9, 11 - 15.
Wang, H. and Hanna, S.D. (1997), “Does Risk Tolerance Decrease with Age?”, Financial Counselling and
Planning, Vol. 8, Issue 2, pp. 27 - 31.
Wright, K.B. (2005) “Researching Internet-Based Populations: Advantages and Disadvantages of Online Survey
Research, Online questionnaire Authoring Software Packages, and Web Survey Services”, Journal of
Computer-Mediated Communication, Vol. 10, Issue 3.
Zhang, B., Deer, L., Wardrop, R., Grant, A., Garve, K., Thorp, S., Ziegler, T., Ying, K., Xinwei, Z., Huang, E.,
Burton, J., Chen, H., Lui, A. and Gray, Y. (2016), “Harnessing potential The Asia-Pacific alternative
finance benchmarking report”, Cambridge Centre for Alternative Finance, Cambridge.
Yang, D. and Zhang, X. (2016), “Review of the Domestic Crowdfunding Industry Development”, Journal of
Service Science and Management, Vol. 9, pp. 45 - 49.
Page 20 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Figure I: Total global crowdfunding market share and annual growth prediction (2015)
Source: Crowdexpert (2015)
Figure II: Top 10 USA crowdfunding industries (2013 – 2015)
Source: Crowdexpert (2015)
Page 21 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Table I: Statistics on funds invested and percentage of portfolio invested through property crowdfunding platforms
N Mean Std. Deviation t-statistic
Gender
Funds invested (AUD) Female 17 16323.53 19270.234 .482
Male 45 13485.18 21159.804
Percentage invested
(%)
Female 17 32.62 41.051 1.489
Male 45 16.49 28.609
Age
Funds invested (AUD) Less than 55 years 23 15210.13 18632.434 .277
55 years and above 39 13705.13 21807.084
Percentage invested
(%)
Less than 55 years 23 14.85 22.583 1.262
55 years and above 39 24.49 37.565
Investor type
Funds invested (AUD) New investor 12 5986.08 4992.672 2.956***
Existing investor 50 16250.00 22336.766
Percentage invested
(%)
New investor 12 42.42 44.673 1.979*
Existing investor 50 15.75 27.609
*** sign at 0.01, ** sign at 0.05, * sign at 0.1
Page 22 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Table II: Statistics on percentage of portfolio invested in asset classes
N Mean Std. Deviation t-statistic
Gender
Cash (%) Female 17 45.71 38.451 2.258**
Male 45 22.67 27.764
Bonds (%) Female 17 4.12 11.757 .612
Male 45 2.58 7.503
Stocks (%) Female 17 13.76 16.858 4.534***
Male 45 43.09 33.613
Other (%) Female 17 36.41 37.279 .486
Male 45 31.67 33.175
Age
Cash (%) Less than 55 years 23 19.30 23.879 2.033**
55 years and above 39 34.69 35.597
Bonds (%) Less than 55 years 23 3.48 10.202 .326
55 years and above 39 2.72 7.980
Stocks (%) Less than 55 years 23 33.65 29.101 .257
55 years and above 39 35.87 34.856
Other (%) Less than 55 years 23 43.57 35.284 1.920*
55 years and above 39 26.72 32.218
Investor type
Cash (%) New investor 12 47.67 44.106 1.739
Existing investor 50 24.50 27.675
Bonds (%) New investor 12 2.08 7.217 .399
Existing investor 50 3.22 9.184
Stocks (%) New investor 12 17.25 37.657 2.168**
Existing investor 50 39.32 30.156
Other (%) New investor 12 33.00 40.238 .004
Existing investor 50 32.96 32.928
*** sign at 0.01, ** sign at 0.05, * sign at 0.1
Page 23 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Table III: Property crowdfunding return expectations (%) and investment time horizon on an annual basis in relation to respondents’ gender, age and investor type
What is your gender? Female Male Total % Pearson
Chi-Square
Return expectations .880
0% - 5% 8 18 41.94
6% - 10% 8 22 48.39
11% - 15% 1 4 8.06
21% and above 0 1 1.61
Total N = 62 17 45 100
Investment time horizon .829
Less than 5 years 5 12 27.42
5 years and above 12 33 72.58
Total N = 62 17 45 100
What is your age? Less than 55
years
55 years and
above
Total %
Return expectations .099*
0% - 5% 8 18 41.94
6% - 10% 10 20 48.39
11% - 15% 4 1 8.06
21% and above 1 0 1.61
Total N = 62 23 39 100
Investment time horizon .174
Less than 5 years 4 13 27.42
5 years and above 19 26 72.58
Total N = 62 23 39 100
Is your investment in property crowdfunding the
first financial investment you have ever made?
New investor Existing
investor
Total %
Return expectations .252
0% - 5% 8 18 41.94
6% - 10% 3 27 48.39
11% - 15% 1 4 8.06
21% and above 0 1 1.61
Total N = 62 12 50 100
Investment time horizon .834
Less than 5 years 3 14 27.42
5 years and above 9 36 72.58
Total N = 62 12 50 100
*** sign at 0.01, ** sign at 0.05, * sign at 0.1
Page 24 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
Table IV: Respondents’ risk appetite in relation to their gender, age and investor type
What is your gender? Female Male Total % Pearson
Chi-Square
Risk appetite .13
Risk taking 3 17 32.26
Risk adverse 14 28 67.74
Total N = 62 17 45 100
What is your age? Less than
55 years
55 years
and above
Total %
Risk appetite .01***
Risk taking 12 8 32.26
Risk adverse 11 31 67.74
Total N = 62 23 39 100
Is your investment in property crowdfunding the first financial
investment you have ever made?
New
investor
Existing
investor
Total %
Risk appetite .048**
Risk taking 1 19 32.26
Risk adverse 11 31 67.74
Total N = 62 12 50 100
*** sign at 0.01, ** sign at 0.05, * sign at 0.1
Table V: Respondents’ mean scores on financial knowledge variables
Interest rates,
finance charges
and credit terms
Credit ratings and
credit files
Managing
finances
Investing
money
Information in
your credit
report
Mean 4.02 3.60 3.90 3.74 3.21
Standard
deviation
0.839 0.966 0.900 0.904 1.147
Likert Scale: 1=No knowledge; 2=Very little knowledge; 3=Limited knowledge; 4=A fair amount of knowledge; 5=A lot of knowledge
Page 25 of 26 Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960
Journal of Financial Managem
ent of Property and Construction
JFMPC Response to Reviewers Form (Version 17-06-14)
Page 1 of 1
The Journal of Financial Management of Property and Construction
Author(s’) Response to Reviewers Form
Manuscript ID: JFMPC-12-2016-0055.R2
Referee 1
I am now pleased to report that I am in a
position to accept your manuscript - subject to a
careful edit to pick up any minor drafting issues -
eg lagging rather than lacking at one point!
Given the 'right first time' approach adopted by
the publisher it would be good to have this
carefully scrutinised prior to acceptance.
The paper has been carefully read and edited as per
journal guidelines.
Page 26 of 26Journal of Financial Management of Property and Construction
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960