Vietnam: In order to invest in real estate, what requirements must a real estate investment fund meet?
What are the provisions on real estate investment funds in Vietnam?
Pursuant to Article 50 of Circular No. 98/2020/TT-BTC on general provisions on real estate investment funds as follows:
General provisions on real estate investment funds
Real estate investment funds are not allowed to perform construction activities, implement and develop real estate projects. Development of real estate projects includes one or some of the following operations:
1. Attend auctions of land use rights and bidding for implementing immovable property projects;
2. Propose projects to competent authorities for granting construction permits;
3. Implement technical infrastructure construction projects, building works and housing works of 1/500-scale detailed planning approved by competent authorities, including detailed design tasks; attend bidding and selection of building contractors; perform and supervise construction activities, etc. as prescribed in the Law on real estate business.
Thus, real estate investment funds are not allowed to perform construction activities, implement and develop real estate projects. Development of real estate projects includes one or some of the following operations:
- Attend auctions of land use rights and bidding for implementing immovable property projects;
- Propose projects to competent authorities for granting construction permits;
- Implement technical infrastructure construction projects, building works and housing works of 1/500-scale detailed planning approved by competent authorities, including detailed design tasks; attend bidding and selection of building contractors; perform and supervise construction activities, etc. as prescribed in the Law on real estate business.
Vietnam: In order to invest in real estate, what requirements must a real estate investment fund meet?
In order to invest in real estate, what requirements must a real estate investment fund meet?
Pursuant to Clause 4, Article 51 of Circular No. 98/2020/TT-BTC, a real estate investment fund is allowed to invest in the real estate meeting the following requirements:
- The real estate is traded in accordance with the Law on real estate trading.
Specifically, Article 5 of the 2014 Law on Real Estate Trading in Vietnam, the types of real estate to be put on the market include:
+ Existing buildings of organizations or individuals;
+ Off-the-plan buildings of organizations or individuals;
+ Buildings which are public properties to be put on the market permitted by competent agencies;
+ Types of lands whose land-use rights are permitted to be transferred, leased, sublet as prescribed in law on land.
The real estate must be located in Vietnam and is invested for the purpose of lease or operation to earn stable profits.
Types of invested real estate must be conformable with investment objectives and policies stated in the fund's charter and prospectus;
- The invested real estate is finished house or building as prescribed in the Law on construction. The fund may invest in real estate items which are under construction if they meet the following requirements:
+ The real estate is not the vacant land as prescribed in the Law on real estate business and the Law on land;
+ The construction project has been being implemented according to the approved progress by the time of capital contribution by the fund;
+ There are valid contracts signed with potential clients to ensure that the real estate may be sold, put into use or leased immediately after it is finished;
+ Total value of real estate items under construction shall not exceed 10% of total value of the fund’s assets.
What assets are included in the investment portfolio of real estate investment funds in Vietnam?
Pursuant to Clause 2, Article 51 of Circular No. 98/2020/TT-BTC stipulating this content as follows:
Investments and investment portfolio of real estate investment funds
1. The investment portfolio of a real estate investment fund must comply with the provisions in Clause 1, Clause 3 and Clause 9 Article 24 hereof.
2. The investment portfolio of a real estate investment fund shall include the following assets in Vietnam:
a) The assets specified in Points a, b, c, d, dd and e Clause 2 Article 24 hereof;
b) Real estate items meeting the requirements in Clause 4 of this Article.
Thus, the investment portfolio of a real estate investment fund shall include the following assets in Vietnam:
- Deposits at commercial banks as prescribed by the Law on banking;
- Money market instruments, including financial instruments and negotiable instruments as prescribed by law;
- Government’s debt instruments, Government-backed bonds and municipal bonds;
- Listed shares, shares registered for trading, bonds listed on SE, and public fund certificates;
- Unlisted shares of issuers that are operating under the law of Vietnam; shares of joint-stock companies or stakes of limited liability companies;
- Real estate items meeting the requirements in Clause 4, Article 51 of Circular No. 98/2020/TT-BTC.
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