Data sheets & risk scoring
AREIP have created a data sheet to help accurately and consistently characterise investment products. The AREIP data sheet is a standardised list of common and key investment product characteristics (data points) we expect most real estate investment opportunities to possess. Investment platforms and other investment originators can use the data sheet when originating new investments and presenting them on their platforms.
The purpose of creating a standard investment product data sheet is to help investment originators to clearly present their investment products to their investing customers. It also helps the investing customer (aka Investors) better understand and compare the investments made available by a single originator or between originators. Taking it a step further, the data sheet can also assist with risk assessment and therefore assist in the investment decision making process. Certain data points and investment characteristics are given a risk weighting in order to arrive at a single risk score that can be easily compared across investment products.
AREIP have created their own risk scoring methodology, this can be adopted as is or adapted to the meet the user’s preference to suit their own views of risk. Investment originators can adopt the standard data sheet solely and, if they wish, the AREIP risk scoring process. They do not have to adopt both. Projects adopting the AREIP data sheet and risk scoring can be labelled as “AREIP Compliant” i.e., compliant with the AREIP standards. Adopting the standard has benefits for both the originator and their investors.
- Originators benefit from a uniformity of investment product descriptions and risk scoring, which can help them differentiate their investment offering from other originators on a level playing field.
- Standardisation and transparency enable Investors to compare and evaluate investment opportunities more easily. Thereby engendering trust and facilitating better decision making and more precise portfolio management.
Originators who become AREIP members will be able to contribute to the AREIP standards and development of best practice guidelines. The predicted outcome of adopting the AREIP standard investment data sheet and risk scoring process is to enhance investor confidence and facilitate a more efficient secondary market. We expect the improved transparency and user experience to lead to broader acceptance of online property investment as a mainstream investment asset class.
The data sheet and risk scoring will evolve as more members join and contribute to the effort to raise standards in the market. Once the data and risk standardisation process are complete our goal is to then work towards establishing the central marketplace to improve market liquidity for investors.
The risk scoring process is explained in the downloadable pdf below.