General Investment Risks
The main risk associated with any type of investment is the total or partial loss of the invested capital, as well as the probability of obtaining a lower return than expected or estimated. You should be aware that the higher the estimated return of an investment, the greater the risk associated with it. It is important to evaluate this point carefully before making an investment decision. We strongly recommend that you review all the information provided in this document to help inform your investment decisions.
Failures or inadequacies in processes, personnel, and systems can significantly impact an investment. This is the operational risk that exists in all market activities. At Wecity, we have taken the appropriate technical and organizational security measures to minimize operational risk for our activity, as well as the risk for investors and developers who use our platform. Furthermore, we have implemented a Customer Protection Regulation (Reglamento para la Defensa del Cliente) that outlines the requirements and procedures of our Customer Service Department to effectively address any complaints or claims (reclamaciones) you may have in a legal and efficient manner. This is our way of ensuring that we can provide the best possible service to our customers.
In a real situation of inflation, with the continued and widespread increase of market prices for goods and services, the loss of the value of money is inevitable, and as a result, your purchasing power and ability to consume are reduced. The effect of inflation on any investment is precisely that: the real return on the investment made decreases.
Risks Associated with Availability of Invested Capital
Before making any investment, you should consider whether you will need the money you plan to invest in the short term. Investing involves the possibility that you may not be able to access the invested funds when you require them. Therefore, you should pay attention to the estimated timeframe for the liquidity of your investment and the corresponding returns. For more information, please refer to our General Conditions for Participatory Financing Services (Condiciones Generales aplicables a Servicios de Financiación Participativa)
Risks Associated with Concentration of Investments
We won’t advise you on whether you should concentrate or diversify your investments; that’s your decision. However, we do want to make sure you understand the basic rule of diversification in finance. Diversification means multiplying and varying, in contrast to concentration. In the world of investments, diversification involves spreading out investments across various projects and options to assume smaller risks, rather than concentrating investments in a single project and assuming a higher risk.
Systemic market risks
As an real estate investor, you should be aware of, understand, and assume the systematic risks inherent in the real estate market as a specific market. For example, the evolution of interest rates and credit margins from financial institutions regarding the real estate market is a systematic risk of the market that the investor assumes, with the possibility that changes in rates and margins may negatively affect the value of the properties. Generally, a decrease in rates leads to an increase in yield, and vice versa. Another example of a systematic risk in the real estate market is its cyclical nature: this market is susceptible to be affected by conjunctural cycles that cause fluctuations in the value of properties. Experience confirms this.
Risks associated with the political, economic, social, and regulatory context
Governments inevitably change, so as a real estate investor, you should stay informed about the evolving economic, political, social, and regulatory landscape in the market. This includes national and European legislative reforms, public administration criteria, environmental factors, and more. Ultimately, these factors can impact the value of properties, acquisition costs, and your potential returns as an investor.