VPS Securities ordered to halt fractional real estate investments

Fractional real estate products are being introduced on Fnest. Photo screen shot

HÀ NỘI — The State Securities Commission (SSC) has told VPS Securities Company to immediately cease the distribution of securities certificates in the form of fractional real estate, said an official from SSC. 

VPS has recently partnered with Fnest JSC to implement an approach where real estate is divided up into shares and sold to investors through the VPS SmartOne application, with a minimum cost of VNĐ10,000 (US$0.39).

Fnest and VPS have undertaken the subdivision of apartments and villas for sale to investors, allowing them to own a portion of the real estate with a minimum investment of only VNĐ10,000 per share. 

After purchasing Fnest shares, investors have two options, sell the fractional real estate on the secondary market, similar to selling stocks, or wait for Fnest VPS to sell the real estate upon achieving expected profits and distributing profits based on the shares held.

For example, a VNĐ10 billion property would be divided into one million Fnest shares. Investors can acquire these fractional shares and benefit from the appreciation in value as well as the professional management and operation activities conducted by specialised organisations.

During a press conference held by the Ministry of Finance on Tuesday afternoon,  Bùi Hoàng Hải, Vice Chairman of the SSC, said there are currently no specific regulations in place for this form of fractional real estate. 

As a result, the SSC requested that VPS halt these fractional real estate share sales in order to ensure legal compliance and investor safety.

The SSC added buyers are essentially investing in a fraction of the real estate, rather than having any complete ownership.

Deputy Minister of Finance Nguyễn Đức Chi stated that the ministry has directed the SSC to closely monitor the operations of securities companies. 

While there is no explicit prohibition at present, services must operate within licensed sectors and industries. 

If they fall outside the authorised scope, their activities will need to be halted for a comprehensive assessment by the regulatory authorities.

Fnest, founded in November 2022, is headquartered in Long Biên District, Hà Nội. Fnest specialises in real estate services such as consulting, brokerage, auctions and land use rights. 

Meanwhile, the VPS SmartOne app offers various properties for sale, including villas, shophouses and condominiums. Investors pay a transaction fee of VNĐ30 per Fnest for trading in these fractional real estate shares. 

Currently, all nine real estate codes have been sold, but secondary trading options are still available. —  VNS