Updated  
November, 05 2011 08:06:08

Real estate funds may boost investment

Potential investors look at models of properties in HCM City. A real estate investment trust fund would bring many practical benefits to both the market and investors, say analysts. — VNA/VNS Photo Hoang Hai

Potential investors look at models of properties in HCM City. A real estate investment trust fund would bring many practical benefits to both the market and investors, say analysts. — VNA/VNS Photo Hoang Hai

HCM CITY — Property analysts are calling for the establishment of real estate investment trust funds (REITs), saying they would yields practical benefits to the market and investors.

Like other funds, REITs can be publicly traded or privately held. Public REITs may be listed on exchanges like shares.

A senior World Bank expert said REITs were an effective channel for investment, development, and management of earnings from real estate, hotels, apartments, and other property.

Individuals can buy into the funds, even in small quantities, and have a source of regular income from dividends because 90 per cent of revenues have to be distributed to shareholders.

At a recent conference in HCM City, experts in real estate and construction spelled out the many advantages offered by REITs and exhorted property investors to consider them for mobilising funds.

Nguyen Van Hoang, CEO of the VREIT Management, said REITs would create safe, long-term investment opportunities.

Dividends could be lower than from shares but were higher than from government bonds, he said.

Phan Thanh Mai, general secretary of the Viet Nam Real Estate Association, agreed, saying REITs could make a significant contribution to the development of the country's property market.

Officials from the construction ministry said establishing REITs would help overcome the hurdles related to raising capital for housing development.

Housing development now relied on bank loans and a little bit on public funds.

REITs would mobilise disposable funds with small investors and households, they said, but for that they should get tax and other breaks.

REITs had been developing strongly around the world, but remained a new concept in Viet Nam which lacked a comprehensive legal framework for establishing and operating them.

An REIT market had to be created soon to facilitate development of not only commercial housing but also social housing.

This was because REIT could help social housing projects tap the market, helping ease the pressure on public funds. — VNS

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