Risks Factor

Defined terms starting with a capital letter hereinbelow shall have the meaning ascribed thereto in Crowdpark SA's T&Cs.

The Platform provides indications on future financial or sales developments and results as well as other forecasts. These indications contain subjective assessments and are based on estimations and assumptions which appear to be reasonable to the Operator at the time of publication. However, it is possible that the actual results deviate from the forecasts due to various risk factors and the impossibility of controlling them. In addition, the value of a property investment depends of various factors, which may change.

The investments proposed on the Platform are suitable for individuals who are familiar with the specific risks of property investments. The Operator advises each User to become familiar with property investments before investing in a project and to obtain professional guidance. In addition, the Operator advises each User to integrate a property investment carried out on the Platform into an overall investment strategy and a diversified portfolio.

Property investments are long-term investments whose performance depends on various economic, legal and fiscal factors, which may vary over the term of the investment. These factors are variable and uncontrollable in such a way that partially or completely losing the invested amounts cannot be ruled out. Moreover, risks may arise or affect the investment at any time, whether during the ownership of the property or on purchase thereof, organisation of the financing, maintenance or sale of the property.

It is not possible to draw up an exhaustive list of the risks linked to property investments as they may be unexpected and unforeseeable. This fact sheet is intended to present the main risks linked to property investments to the User and draw his attention to them:

a. Fluctuations in value

Property investments may be subject to potentially considerable fluctuations in value. Changes in the value of property depend on various factors, such as general economic conditions, current economic fluctuations, economic growth, inflation and the state of the Swiss property market and competition.

b. Property estimates

The value of each property is fixed on a reference date and property is regularly valued by experts using recognised valuation methods. Nevertheless, an estimate of the value of a property depends on various factors, including some subjective factors, and it is possible that a property cannot be sold at its estimated value. The sale price of a property mainly depends on the state of supply and demand at the time of the sale.

c. Lack of liquidity

Property investments are not very liquid by nature.  The location of a property may increase this lack of liquidity. Limited liquidity of a property investment entails cashflow risks and may cause problems at the time of the purchase or sale of the property. Property investments result in long-term commitments for investors.  In addition, the investments proposed on the Platform are in theory subject to minimum holding periods. Early exit is subject to restrictions and arrangements laid down in the building's rules of use and management.

d. Debt ratio

Using third-party capital to finance a property (leverage) may increase the return. Nevertheless, this implies a higher risk of losses than in the case where the property funded at a higher level or fully using equity.

e. Maintenance and renovation work

All maintenance and renovation work carried out to a property may generate unexpected costs which are payable by landlords, including in particular building defects or structural faults.

The costs of planned maintenance and renovation work on purchase are in theory taken into account in the property estimate. However, it is possible that some unplanned work may be carried out or work generating higher costs than estimated. Work to a building may generate very high costs, which may partially or fully reduce the property return and make it necessary or useful to contribute new funds (equity or third-party funds) if the rental income does not cover all of the costs linked to the building or financing.

f. Vacancy, loss of rental income and administrative risks

It is possible that it is more difficult than expected to find tenants for the property or tenants are found but under less favourable conditions than planned and the property accordingly presents a vacancy rate. Payment of rent by tenants cannot always be guaranteed. In addition, property management is subject to a series of administrative, technical and logistical risks. These different risks mainly depend on current economic fluctuations and economic situation, governing law, need for space to rent and population developments. Occurrence of these risks may result in a considerable loss of rental income.

g. Changes in interest rates, discount rates and capital market rates

Mortgage interest rates and discount rates have a direct impact on property returns. These rates are variable and cannot be controlled and partly depend on the rates applied on capital markets in general.  Increases in these rates may have a considerable negative impact on the income generated by a property. In addition, it is possible that an increase in these rates may not be passed on to rent payments, which will result in having a negative impact on the property's liquidity and return.

h. Environmental risks

In spite of the surveys carried out on valuing or purchasing property, it is not possible to rule out subsequently discovering unexpected pollution or environmental problems. Pollution at a site may in particular bring about high land improvement and maintenance costs, delays to work and even legal proceedings.

i. Insurance risks

The properties proposed on the Platform are in theory collectively insured against fire, water damage and other damage and covered by civil liability insurance. Nevertheless, some risks and the consequences of such risks, such as natural disasters or earthquakes, are not covered by such insurance policies. In addition, insurance companies may refuse to pay for some damage, in particular personal injury or contents damage, and the financial consequences are consequently passed on to landlords. 

j. Legal risks

Property investments and changes in property values depend on the governing law and legal developments.  The tenant's right to a lease, administrative law on construction, tax law or law on property purchases by foreigners may notably be subject to restrictions which have an impact on property and property estimates. Furthermore, it is necessary to take into account risks linked to changes to laws, regulations and administrative or judicial practices. In particular, the Operator cannot guarantee that all permissions required to complete an investment will be granted. Properties and various property-related agreements (lease, building management, caretaking and contracting agreements, etc.) may give rise to complications and legal disputes, which have a negative impact on the investment. 

k. Risks specific to each property

Each building presents specific risks which, for instance, are linked to its geographical location, development of the region or district where it is located, its use or age, applicable tax rules or appeal of the building. These specific risks may change over time and add to general risks linked to property investments. The Operator consequently advises each User to diversify his investments, in particular by investing funds in different properties in different categories.