We all know banks make it conditional for 70-80% of every development to be pre-sold before they will agree to finance the project. This means that the vast majority of property development in Australia today is in fact “crowd funded” anyway, since without these pre-sales, none of these projects would get off the drawing board.
We also know that the lead times between off the plan sales and project completion often extend from eighteen months to two years, so the only advantage off the plan buyers enjoy for having to wait so long, is a stamp duty saving.
Though effectively “crowd funded” the established development process is therefore more of a case of crowd control than crowd enabling, since aside from one or two alternative colour schemes and finishes, the “crowd” doesn’t have anymore say in the design of their spaces, nor do they enjoy the benefits of having underpinned the project risk.
In providing the capacity to assemble a crowd of like minded people with shared objectives and values from the outset, citiniche will radically transform the property development Industry in a number of fundamental ways.
It will reduce development risk, which aside from the innovative funding methods this will spawn, citiniche will enable market forces to bring the cost of housing down. It will also give consumers the opportunity to join supportive communities and have a say in the design of both their development and their individual spaces.
Citiniche will enable people to harness the purchasing power of the niches or crowds it forms, to get a better deal and a bigger say in having the design respond to their needs and preferences.
Citiniche will also change the adversarial dynamics of the planning process, since instead of being a contest between developers versus residents, it will introduce new communities into established ones which has the potential to be a far more socially cohesive paradigm.
HOW IS CITINICHE DIFFERENT FROM OTHER CROWD FUNDING WEBSITES?
Crowd funding has grown so quickly as to have prompted changes in corporate governance both in the USA and in Australia. In 2012, President Barack Obama signed the JOBS (Jumpstart Our Business Startups) Act, legislation that effectively lifted a previous ban against public solicitation for private companies raising funds.
It is important however to distinguish citiniche from other crowd funding models. Citiniche embodies the spirit of other models in that it allows good ideas which do not fit the pattern required by conventional financiers to break through and attract support through the wisdom of the crowd.
It differs however in that it does not collect money from the crowd, instead it connects the crowd to development professionals who serve the needs, budgets and preferences of the crowd directly. This in turn enables development professionals to plan with greater certainty, reducing their risk and enabling them to deliver with greater economy.
Depending on the social capital of the crowd, this may result in 100% project funding, reducing development risk to the extent where substantial savings are made. As a consequence competition for crowds offering these advantages will enable developers to offer bespoke design at reduced rates without necessarily reducing their profit margins.
Citiniche offers the equal possibility for crowds to develop new development funding models and for developers to offer bespoke design for niche developments more economically.
EXAMPLES OF OTHER CROWD FUNDING WEBSITES
The following are examples of some related web sites where communities of shared interest focus their activity to improve outcomes for public spaces and commercial developments including one which gives investors a share in the profits. Citiniche differs from these in that it creates niches of common interest who then help shape their own housing developments to better respond to their needs and preferences.
Spacehive – UK crowd-sourced and funded community projects: http://spacehive.com
Popularise – US crowd-sourced ideas for development:https://popularise.com
Bacata project – Colombian crowd-funded skyscraper:http://www.bdbacata.com/newsite/ and http://www.springwise.com/homes_housing/in-colombia-worlds-crowdfunded-skyscraper-
Better Block – US community participation projects:http://betterblock.org/ and
Renew Australia – Australian urban renewal guide: http://www.renewaustralia.org/