Budding real estate crowd-funding models have been thrown firmly into the lime-light, after the country's largest developer rolled out its debut product.

But analysts say China's nascent property rental market, as well as regulatory hurdles, could mean it might still take time for the industry's latest funding trend to fully catch on.

Last week China's largest commercial real estate company Wanda Group introduced its first crowd-funding project, in partnership with 99 Bill, a third-party payment and settlement service company in which Wanda bought a controlling stake in December.

Wanda is seeking individual investments as small as 1,000 yuan ($161) from online investors to help finance its next batch of shopping malls, or Wanda plazas, it said in a statement.

The fund will be invested in the constructions of the Wanda plazas that are expected to start this year, and open for rent next year.

Investors are promised a 6 percent annualized rental return from the plazas, and another expected 6 percent on the properties' value appreciation.

The funding experiment is part of a broader strategy to move away from capital-intensive construction and sales toward an "asset light", income-based approach.

It is a property management business model already successfully adopted by rival developers in Hong Kong, such as Sun Hung Kai Properties Ltd and Cheung Kong Ltd.

For ordinary investors, the appeal is gaining access to an investment opportunity that is relatively risk-low, given Wanda's powerful brand reputation.

But analysts said they view the project's significance as greater in symbolism than actual financial reward, given the actual funding levels are likely to be small from online investors.

The four-day fundraising period was closed, but the total capital raised has not been revealed. "It is still unclear where the plazas will be located. Wanda's previous plaza expansions concentrated in third - and fourth-tier cities, where risks abound," said Fu Yichen, a development analyst with China Real Estate Information Corp.

"Investors favor projects in first-tier cities, while staying cautious toward projects in small cities."

To financial institutions, a developer's strength lies in being able to control project risk, so it is desirable for them to team up with major developers to channel funds into selected small developers, Fu said, a model already used effectively by China's Greenland Group, for instance.

After successfully raising 450 million yuan this April through its peer-to-peer financing product, it plans to raise more funds for other developments.

Many commentators remain skeptical, however. Robert Fong, a property analyst at Bloomberg Intelligence, said properties with stable rental flows are the cornerstones of crowdfunding, and it will be difficult for Chinese mainland developers to copy their Hong Kong counterparts, who rely on rent as recurring revenue, instead of sales.

"China Overseas Land and Investment Ltd, a leading developer, in 2008 aimed to scoop 20 percent of its revenue from rent in five years. Now it's 2015 and the target has not been achieved," said Fong.

"It is not good if developers do not tap the Internet for finance. But when they do, it is hard to see any return in the near term."

Lawyers also see legal pitfalls. Zhao Yanchun from Allbright Law Offices said an equity crowdfunding is essentially a mini-IPO, and so requires rigorous information disclosure and a high thresh-old for "qualified investors" - something both of Wanda's projects lack, said Zhao.

So until China passes laws that legalize non-accredited individuals to invest online into private firms, crowdfunding in China will continue to walk in the gray zone.

zhengyangpeng@chinadaily.com.cn