Real estate investment fund must invest at least 65pct of NAV in core sector

Real estate investment fund must invest at least 65 percent and maximum 100 percent of its net asset value (NAV) in realty sector, the local online newspaper Saigon Economic Times said, citing the State Securities Commission of Vietnam (SSC)’s draft guidance circular announced on November 23 on establishment and management of securities investment funds to seek opinion from market members.
The draft also provides specific guidance for the operation of close-ended fund, securities investment company and fund management company.

The draft circular stipulates the capital mobilisation, establishment as well as management for securities investment funds, including close-ended fund, member fund, real estate investment fund, public securities investment company, individual securities investment company, securities and real estate investment company and related activities of the fund management company, depository bank and custodial bank.

However, the establishment and management of open-ended fund have not been mentioned in this draft yet. Earlier, in the roadmap of implementing measures to stimulate the Vietnam’s stock market, SSC said the circular on open-ended fund is expected to be issued in the fourth quarter 2011.

Due to the regulations on establishment of domestic real estate investment fund have not been completed yet, currently most real estate investment funds belong to foreign funds such as: Saigon Asset Management; Vinacapital; Dragon Capital and Indochina Capital.

If the model of this fund is formed successfully, real estate enterprises will not have to depend too much on capital sources of banks, particularly in the context of high interest rates currently.

According to the draft, real estate investment fund is allowed to invest minimum 65 percent and maximum 100 percent of its NAV on property projects. Real estate investment fund is disallowed to lend or guarantee any loans or borrow more than 5 percent of the fund’s NAV at the time of borrowing.

Property must be held within a minimum of two years from date of purchase, except for cases of being forced to sell assets as required by law or by decision of the investor board or the representative board of the fund.

Property investment fund is also allowed to invest maximum 35 percent of its NAV in money and money-equivalent instruments, valuable papers, transfer instruments according to laws on banking, listed shares, deposited shares, registered stocks, government bonds or government-guaranteed bonds. – Viietbiz24

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market

Posted by VBN on Nov 26 2011. Filed under Real Estate. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry