Jelly’s father was a property developer in Northern Ireland and he “grew up on building sites”. However, rather than following his father into property straight away he studied for a degree in Banking and Finance and moved into a career in equities. He worked with UBS in Australia and subsequently with US investment bank Jefferies in London and with Canadian-owned TD Waterhouse in Dublin before spending five years with fintech startup, Eagle Alfa. In April of this year he quit his job to focus on setting up Property Bridges which is based at the NDRC in Dublin.
“In 2012, Colombia’s newest and tallest skyscraper was financed by thousands of ordinary citizens in a world-first, revolutionising the way real estate is financed,” Jelly says. “When I came back from London it was clear how dysfunctional the Irish property market had become following in the crash. It was the story of the BD Bacata [the Colombia skyscraper] that inspired me to bring the real estate crowdfunding solution to Ireland.
‘Minimise the risk’
“We are completely revolutionising the way real estate is financed by opening it up to ordinary investors through our platform. This provides a major source of non-bank finance to small and medium-sized construction firms who are starved of funding. We are different from existing peer-to-peer lenders as we secure all our loans by first charge. This means we take a legal charge over the development site which provides an added level of security to the investment. We minimise the risk and most importantly provide investors the yield they crave, offering returns of between 8-10 per cent.”
Jelly points out that despite the housing crisis here and elsewhere in Europe, raising development funding remains difficult, especially for smaller construction firms.
“Banks pulled out of the market in the wake of the global financial crisis and remain reluctant to lend on smaller projects,” he says. “The old system was dominated by banks, middle men and ultra-wealthy individuals. It’s an inefficient opaque system that benefits the intermediaries and one that ordinary investors have no access to. Our platform disrupts the system by removing the middle-men, and for the first time, opens up this attractive asset class for both retail and institutional investors alike.”
Jelly’s potential clients are small and medium-sized property developers and institutional investors initially in Ireland and then in Europe. Development costs to date have been in the order of €70,000 which has come from personal resources and support from the NDRC. Most of the money was spent on developing the platform and paying legal costs.
“We wanted to have everything in place and totally above board from a legal perspective from day one,” Jelly says. “There are currently no regulations here in our sector, but they will come, so we have followed the UK model which is stringent and have actually gone over and above it. Our website is now live and our first investment projects will be available on the platform within the next few weeks as soon as we have completed the due diligence process.”
So far, 125 investors have signed up to Property Bridges and the company is also looking to partner with an institutional investor and to hire staff with property-lending experience. Property Bridges will make its money by charging developers an arrangement fee based on a percentage of the total loan size.
“Our target loan size is between €250,000 and €3 million,” Jelly says. “Traditional lenders, such as the banks, have no appetite to service loans of this size and cannot service them in a cost-effective manner. Existing alternative lenders also tend to lend on higher deal sizes.”