Establishing real estate investment trust in Vietnam

Abstract

Since 2008, Vietnamese real estate market has been in frozen and this stagnation has caused many severe consequent to the Vietnam. Although there are large unsold inventories and huge bad debt; the investors‟ confidence in this market keeps declining, tightened the credit lending policy along which the shortage in investment capital has made the situation difficult than ever. This thesis is the suggested solution for Vietnam real estate market which is Real Estate Investment Trust - REIT - is a type of real estate companies modeled after mutual funds; own and manage properties. It has been applied successfully in many countries around the world and other developing markets are researching to apply this model to their countries. It has to meet with requirements which make it unique as well as attractive to be qualified as a REIT. The thesis also introduces the Singapore REIT – one of the most successful REIT in Asia: the second largest market capitalization and the leader in cross-border REITs. These achievements were thanked to the prudential and supportive regulations and effective management. As an ideal REIT, this thesis analyzes and compares the performances of REITs and non-REITs in Singapore, then infers the result into Vietnamese market as the expected return may be earned when establishing Vietnam-REIT. After the calculation and analysis, the result comes out as investing in “future Vietnam-REIT” which earn higher return then just investing in Vietnamese non-REIT real estate stocks. Nevertheless, with just the current available regulations and tax imposition policy, it would be hard for Vietnam-REIT to operate and attract both of the real estate companies and the investors. Therefore, this thesis also suggests the regulation “lessons”, rules and procedure to convert into REIT from the two neighbor countries: Singapore and Thailand.

In conclusion, this thesis expects REIT will give more opportunities for both investors and the sector to invest, revive and grow in the liquid, stable, transparent, effective and healthy manner.