Vinaland Investment Corporation has launched a new method of calling capital for building two apartment projects in HCMC's District 7, under which homebuyers can acquire the apartment-buying right at VND5 million a meter on installments plus the actual construction cost to take over the property upon completion.

Tran Minh Hoang, board chairman of the company, said Vinaland has issued 100 so-called housing economy certificates at VND5 million each to its staff and some outsiders.

Hoang explained that the certificate holders are lenders to Vinaland. A buyer will pay VND5 million per month for five years, totaling VND300 million to acquire 60 buying rights. By this time the certificate holder will have had the rights to purchase 60 square meters of floor space of a future apartment.

When actual construction begins, the rights buyer will pay those construction costs. For example, at VND8 million per square meter, construction costs would total VND480 million for a 60-square-meter apartment bringing its total value to VND780 million.

Hoang said the scheme is flexibly based on the payment capacities of low-income people and will give Vinaland staff a chance at owning a home. The company said that the method is not new to other organizations in and out of Vietnam. In a low income housing project for civil servants initiated by the Ministry of Construction, which seeks Government approval, each civil servant pays 5% of his salary for 15 to 20 years as installments on his future home.

Hoang added that if a rights holder does not want to buy his apartment he may ask the company to reimburse the money with the basic interest rate announced by the State Bank of Vietnam. If after five years the company has not developed the project as promised, rights holders will be compensated with all their payments plus interest sums calculated by applying an interest rate twice the prime rate of the central bank.

Hoang said this is the first apartment project the consulting and brokerage company has undertaken. The two would-be apartment buildings, Vinaland Tower and Saigon South Center on Nguyen Luong Bang Street, will have 600 units.

Before Vinaland's approach, Sai Gon Thuong Tin Real Estate Joint Stock Company, or Sacomreal, used stocks and bonds to mobilize capital when real estate companies found it hard to borrow from banks.

Last year, Sacomreal quenched its thirst for capital by issuing bonds three times to mobilize VND930 billion from property investors to develop its property projects since the Government's credit tightening policy cooled the feverish property market. Each bond holder has the right to buy a Sacomreal apartment and collect the monthly interest upon the value of the bond.

Such capital mobilization methods have yet to be standardized and regulated but are based on investor confidence and the prestige of the issuing company.