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REIT best choice for Vietnam’s property market, says conference

In Uncategorized on December 16, 2010 at 9:34 am

The model of real estate investment trust (REIT) funds should be applied into the rapidly growing real estate market in Vietnam, said economists at a conference on developing residential housing and property market in Hanoi last week.

(Photo: Minh Tri)

Real estate investment trusts (REIT) are booming, with an average profit of around 3-5 percent, Abas A. Jalil, director of the property investment fund AmanahRaya-REIT Managers, said at a conference in Hanoi.

REIT funds focus on leasing lands, buildings, and expanding their property investments to generate as much profit as possible to their shareholders.

Singaporean economist Professor Habibullah Khan said REIT are more competitive in his country. There are three kinds of real estate investment trust, including equity REIT, mortgage REIT and hybrid REIT.

Equity REITs invest in various types of income-producing commercial properties. The income is then shared in investor dividends. Profit will be based on numerous criteria including what type of property it is and how much income it generates.

Mortgage REITs either buy up pools of mortgages made by others or make mortgage loans directly.

A hybrid REITs are merely a REIT that invests both in actual real estate properties and mortgage loans. Most of REIT funds in Singapore are equity REIT, Professor Habibullah Khan said.
Phan Thanh Mai, general director of the property investment fund VPREIT, said REIT funds in Vietnam also developed strongly in the last five years. However, their investment in residential housing market remained low.

Most of investments poured into the housing market were from banks and individual buyers, Mai said. Therefore, he recommended that REIT funds should be allowed to mobilize capital from individuals.  

Statistics showed there were around 10,800 hotels with 210,000 offices, 98 resorts with 8,150 rooms nationwide so far this year. Deputy Construction Minister Nguyen Tran Nam said the local property market remained an attractive destination to foreign investors.

Foreign investors have invested 500 real estate projects with the total investment of more than $40 billion since the end of last year. The outstanding property loans at commercial banks reached VND210.77 trillion ($10 billion) on July.

However, property investors still have to cope with illegal transactions, significant price fluctuations caused by speculation, ineffective land use managements and poor town planning.

Source: SGGP

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