Flexibility in the organisation of liquidity
Each co-owner may put up for sale, at any time, some or all of his or her units at the price she wishes, without charge or penalty. Simply contact Foxstone who will oversee the resell and provide an estimate of the value of their units.
In collaboration with Banque Raiffeisen de la Versoix, Foxstone has carried out the first exchanges of units for an amount of more than CHF 600,000 and has thus created liquidity this this asset class, which is considered illiquid.
“One of the main fears of investors was that they would be stuck indefinitely with shares in illiquid buildings. The establishment of this secondary market has proven the liquidity of our model and we are very pleased with the speed and ease of its initial trading,” explains David El-Eini, Head of Operations at Foxstone
A simplified resale process
Upon the resale of units, the co-owners of the building have a prior right of acquisition (called right of exemption). If none of them express an interest, the shares are offered to all users of the platform, i.e. more than 7,600 investors. To give an example, shares in a building in Lausanne were put up for sale at the beginning of June. Following up on the emails sent announcing the sale of these shares, Foxstone received fifty requests in less than an hour.
Foxstone is in charge of integrating the new buyer into the existing co-ownership. Foxstone will buy back the shares and take over the mortgage from the outgoing co-owner. This simplifies the entire process for investors because Foxstone takes care of the whole transaction.
This secondary market creates liquidity and granularity, as each co-owner can sell as many units as he wishes; as opposed to the sale of an individual property (building or apartment) where the owner is obliged to sell the entire property. In the case of a need for liquidity, participative investment in co-ownership therefore offers more flexibility than owning an individual property.
“These share exchanges, in which our Bank participated, demonstrate the importance of being able to rely on a reliable banking partner that is open to innovation. Our ability to react quickly and adapt to market developments contributed to the success of these transactions. In addition, the transaction went very smoothly thanks to the system set up between Foxstone and our bank. We are very satisfied with our collaboration and very happy to contribute to making real estate investment more liquid and accessible to the greatest number of people”, explains Alex Rodriguez, Member of the Management Board at Banque Raiffeisen de la Versoix.
Foxstone’s vision is to democratize and digitalize real estate investment in Switzerland. The creation of a secondary market for these real estate shares is the first step towards tokenisation, the company’s ambition being to create a fully electronic marketplace where everyone will be able to exchange digitally securitized real estate shares.