Vietnam REITs

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Even though the authorities of Vietnam have taken major steps to improve the situation of real estate investment, still, this process is very complex and lengthy. In 2019, they put a hold on real estate projects for almost a year. As a result, the foreigners started to pull off and refunded their investments.

It is often seen that if you pay a higher price as compared to a local, you might suffer from lower capital gain and yield. But luckily, there are other ways as well to make investments in the real estate market of Vietnam. They are majorly known as Real Estate Investment Trusts (REITs).

In this post, we are going to discuss the REITs available in Vietnam and how foreigners can easily invest in the real estate market of Vietnam through foreign REITs.

Key points in this guide :

  • REITs (Real Estate Investment Trust) Vietnam list
  • Are Foreigners allowed to buy REITs in Vietnam?
  • What is the process to invest in the REITs in Vietnam?
  • What is REIF?
  • Benefits of Buying REITs in Vietnam.
  • Available REITs in Vietnam.
  • How can you find Foreign REITs in Vietnam?

REITs in Vietnam stock Exchange

REITs currently listed on the Vietnamese stock exchange:

TCREIT (Techcom Capital)

Are Foreigners allowed to buy REITs in Vietnam?

Just like the stock market, as it is a very complex and lengthy process to set up a trading account in Vietnam, you also have to visit the country to create your REITs account. Yes, foreigners can buy REITs in Vietnam, but the whole process is not that much easy and simple as it is in the Western and developed countries.

Even though Vietnam has made a lot of progress in this market as well, still, when a person has limited experience, it will be difficult for him to invest in the REITs of developing countries like Vietnam.

What is the process to invest in the REITs in Vietnam?

There is a comprehensive guide that is very helpful for those foreigners who want to invest in the stocks of Vietnam. But the process of investing in REITs is complex and lengthy. You have to visit the country to open an account then you can start trading.

The steps involved in this process are as follows:

  • As a foreign investor, you have to register a Securities Trading Code.
  • Apply for a Securities Trading Account.
  • Open a Foreign Indirect Investment Capital Account (FII Account).
  • Collect your password and username.

REITs are often referred to as REIFs, and the process of their trading is the same as the stock exchange. You should keep in mind that the concept of REIT is relatively new in Vietnam, and you rarely see foreigners investing in this sector of the market.

What is REIF?

According to Vietnamese law, there is no concept of Trusts. But from 2013, the investors are allowed to invest in real estate through funds that are managed by fund management companies. That is the reason REITs are often called REIFs.

Characteristics of REIFs

You can use your capital for investment in commercial or residential real estate projects or also in organizations. As a result, you can get full or partial ownership of the unit. After the investment, you will be issued the stocks or fund certificates.

  • Another benefit is that you don’t have to buy real estate units. Instead, you will have the fund certificates. Your investment will be managed by the trust management board.
  • For investment in companies or real estate developments, the capital is provided by the REIFs to manage and acquire.

Receiving profits from RETFs

To receive profits from REIFs investments, 65% of the net assets are allocated to the real estate investment. But keep in mind that REIF is not directly involved in the development and financing of the projects.

Benefits of Buying REITs in Vietnam

Let’s have a look at some of the benefits of investing in REITs.

Market Access

The rate of growth of Vietnam is 7%, and the investors are getting the benefits from the industrial, residential, and retail real estate sectors. For example, most foreign investors generally pay attention to residential real estate.  But the real benefits lie in the commercial real estate market.

If you want to invest in the commercial real estate market, either you have to make a partnership with a Vietnamese shareholder or just have to open a real estate trading company. This option is not suitable for a single investor but for the organization or company.

Keeping the Ownership and Buying Restrictions in Mind

When you are selling and buying in the real estate market of Vietnam, you must be well aware of the restrictions of getting local ownership. It sometimes happens that foreigner are unaware of the actual prices of the unit in the market.

Even though the percentage of foreign investors is less as compared to the local Vietnamese investors, they also have access to the other local properties such as villas, houses, and other local apartments. That’s why they can create a big difference.

Substitute for Real Estate

When you own a unit, you or your real estate agent has to manage monthly rentals, payments, taxes, and other things. But in REITs, you can leave everything to the management who manages your fund, and they will deal with everything on your behalf.

REITs as Liquid Assets

You can say that real estate is an intangible asset that needs both your money and time and other things to manage. On the other hand, REITs are reliable and flexible and are easier to manage.

Often Give Good Profits

Most of the time, REITs are considered underrated despite the number of benefits they are offering. You have to understand that if the REITs are managed by professionals and experts, they are going to give you a great deal in terms of benefits.

Just like the other developed countries, fund managers keep track of everything and give 90% of the profit to the shareholders at the end of each year. You also have a chance to get a capital appreciation at the time of selling the unit.

Available REITs in Vietnam

Right now, there is only one REIT working in Vietnam because the real estate market of Vietnam is in the developing stage. Let’s talk about some prominent achievements of this REIT Company.

TCREIT (Techcom Capital)

In 2015, TCREIT was the first REIT of Vietnam to get registered in the Stock Exchange of Ho Chi Minh City. It was managed by Techcom Capital (TCC). The REIT was under the code of FUCVREIT. It was not only helping the foreigners in the capitalization but also the local investors in the real estate market of Vietnam.

How can you find Foreign REITs in Vietnam?

There are a lot of REITs that are managed by real estate developers in developed countries such as Singapore. CDL Hospitality Trust and Keppel DC REITs are the most prominent REITs of Singapore. But for Vietnam, you have to stick with TCREIT for a while until the new REIT company is available in the country.