Real estate firms offer sky-high profit rates to attract investors

Investors have been invited to contribute capital to real estate projects and enjoy a profit of 36 percent per annum, and have also been persuaded to buy corporate bonds at a high interest rate of 18 percent per annum.

A real estate firm in Hanoi has announced its policy on special treatment for investors who contribute capital to develop real estate projects.

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Under the policy, investors who contribute VND3 billion are offered an interest rate of up to 35 percent for 24 months. They would also receive gifts, either a Mercedes car or an apartment worth VND2 billion.

The investors who contribute VND2 billion would get an interest rate of 35 percent for 24 months, a Hyundai Santa Fe or a real estate product with the same value.

Those who contribute VND1.5 billion would get an interest rate of 35 percent for 24 months, and a Mazda 3. The same interest rate and a Vinfast Fadil are applied to those who contribute VND1 billion.

The policy is applied from September 1 to October 31.

Investors have been invited to contribute capital to real estate projects and enjoy a profit of 36 percent per annum, and have also been persuaded to buy corporate bonds at a high interest rate of 18 percent per annum.

One real estate firm in HCM City is offering a business cooperation model to develop guest houses for rent, under which VND40 million is contributed to own one room.

The capital contributors would get an interest of VND1.2 million a month for 30 months. After the contracts terminate, they would get back the principal of VND40 million.

If investors contribute VND600 million, they would own 15 rooms and get profit of VND18 million a month for 30 months.

The common interest rate promised to investors is 36 percent. They can withdraw capital after 12 months with the profit of VND25 percent per annum.

Another real estate firm has decided to issue 30 million 5-year corporate bonds at the interest rate of 18 percent per annum. The total value of the bonds to be issued is VND3 trillion and the capital would be used for 3-5 large projects.

A senior executive of the firm said that real estate prices are very attractive now because of Covid-19. After two or three years, the prices of real estate in advantageous positions will double or triple. Therefore, now is the right time to invest in real estate.

The real estate company's bond has the highest interest rate among others. The other bonds issued by real estate firms have interest rates of 10-13 percent per annum.

However, economists have warned of the high risks of these capital contribution modes and bonds that offer ‘surprisingly high interest rates’.

They said the real estate market is in crisis and it is still unclear when it will recover. Investors should be cautious about their investment decisions.

Pham Nam Kim, a respected economist, pointed out that the information transparency of many real estate firms is not high, which will put investors at risk if they buy bonds or contribute capital to the projects run by the firms.

Tran Thuy