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Tuesday, 09 September 2014 07:27

Real estate investment funds (REIFs) have been officially permitted in Vietnam since 15th September 2012 via Decree No. 58/2012/NĐ-CP that provides for the implementation of the Amended Law on Securities. A REIF must hold at least 65% of its total asset value in real estate, with the balance invested in valuable papers, securities or government bonds. Problems include: There is no tax transparency (the most important characteristic of a REIT); It’s still unclear what the restrictions will be on foreign ownership (like with banks and real estate developers), because foreigners can't own land in Vietnam, so if they own a majority of the stock (or exceed the stated threshold), there will be legal problems; REIFs cannot directly develop projects nor provide financing or a guarantee for any development projects. This is a problem due the lack of a developed marketplace and / or the tiny size, and shortage of institutional standard properties (there should be limited permission for development as in South Korea).

Last Updated on Wednesday, 10 September 2014 03:47