The Ministry of Construction has proposed the establishment of a Real Estate Investment Trust (REIT), a fund that raises capital from the public to invest in property projects.

The plan, scheduled to be submitted to the government this month, will help ease the current capital shortage in the real estate market, which mainly relies on bank loans, said Deputy Minister Nguyen Tran Nam.

Besides bank loans, developers can mobilize funds from homebuyers. But they are only allowed to sell a maximum of 20 percent of a project’s units prior to the completion of construction under a government decree.

The construction ministry said it is mooting the REIT or a housing fund that assists employees in buying houses, after studying housing development strategies of other Asian countries.

For example, the Japanese government has set up many companies that raise funds by issuing bonds and then offering long-term loans at low interest rates to developers and homebuyers.

Singapore has a national housing fund that people wanting to buy homes in the future should contribute to. They would then be eligible to access soft loans at the time of purchase.

The Ho Chi Minh City Real Estate Association said it applauded the ministry’s plan to establish a real estate investment trust by issuing fund certificates.

The association said the REIT will not only construct buildings but also provide property loans, thus providing the opportunity to many people with genuine demand to buy their own home.