NEWS
Realty investment fund hard to raise
01-10-2012
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The recently-issued Government Decree 58 provides a legal framework for establishing domestic property investment funds, alongside foreign ones. David Henry, managing director of VinaLand, hoped the decree would create chances for investors to inject more capital into the real estate market, thus improving the market’s liquidity.
However, it is too soon to tell for sure whether local investment funds will be of help. Other factors such as interest rates, land rents and compensation costs should also be taken into account, said Henry.
“From our perspective, the property market will make more positive changes if more funds participate in and create liquidity for the poor-performing market,” he told the Daily.
He said it was now difficult to set up a realty investment fund in Vietnam as local property firms had been listed and domestic investment funds were performing poorly.
“Foreign investors may be considering Vietnam an attractive destination, if they see that the property market has hit or nearly touched its nadir and the market will bounce back in the middle or long term,” said Henry.
“To efficiently manage a property investment fund in Vietnam, we must focus on location, location and location,” he stressed.
One of the biggest challenges for fund managers is they already have large areas of land in hand, they will still have to ask authorities for land use rights and have huge finances to fund site clearance and compensation.
Another difficulty is homebuyers lack confidence in the housing investment environment. Moreover, lending rates are now too high, making life hard for investors and customers of housing projects and thus adversely affecting the market, said Henry.
