This scheme should raise some red flags with Vietnam’s regulators and macro policy hawks, and it will be interesting to see if it is allowed to go ahead, and if so, if anyone actually takes up the offer.
Vinhomes has launched a program, to be run in partnership with jewellery and precious metals companies, that will allow customers to convert gold into cash and then use that cash to purchase Vinhomes properties. After five years, they will then have the option to keep the property or receive cash equal to their gold’s original value, plus ten percent.
Customers, however, must have owned the gold before April 25, 2026, and the converted gold value must cover at least 80 percent of the property price.
There is a lot to unpack here.
Firstly, with apartments running at around VND 100 million per square metre, an average 60 square-metre apartment goes for roughly VND 6 billion (about US$228,000), 80 percent of which is VND 4.8 billion (about US$182,000).
The April 25 cut-off, which presumably means applicants will need to be able to prove when they bought their gold, also means that people won’t be able to pool gold holdings, a family unit, for example.
With this in mind, and an average wage in Vietnam of roughly VND 9 million (US$342) a month, it seems unlikely that there will be many people eligible.
That aside, there are also regulatory issues that this raises, too.
In Vinhomes’ scheme, gold holders hand over their gold for a period of five years with a guaranteed return of ten percent. Framed another way, this looks a lot like a term deposit.
Where it becomes unique is the real estate component, though this is confusing.
At face value, this would allow investors to essentially simultaneously invest in real estate and gold, then choose whichever one performs better after five years, with Vinhomes absorbing part of the downside risk between the two asset classes.
Of course, if the gold price goes up, and Vinhomes is still holding onto the gold, there could be a significant upside.
However, world gold prices might be riding high now, but they fluctuate. Predicting where they might be on a specific date five years from now is extremely challenging. If they are to fall, this could come at significant cost to Vinhomes.
It’s also worth noting that gold in Vietnam trades at a premium, sometimes as much as 20 percent, to world gold prices, on high demand and a low supply stemming from stringent import controls. If those controls are relaxed, and there are plans to do this, that local gold price could drop very quickly.
Finally, this is being framed as a way to free up capital locked in gold held by the general public. This has been a recurring theme in the local press in recent years, as demand for the yellow metal has surged.
This has been tried before. Depositing gold at the bank and collecting interest was popular at the turn of the century in Vietnam, though this came to an end amid a slew of reforms in 2011 and 2012, with the practice seen as a key contributor to macro instability in the country during that period.
The problem being that it increased demand for gold, with holders profiting from the appreciation of the asset and the interest.
Recurring suggestions that gold loans should be tried again have, in this context, consistently been knocked back.
All of that is to say, this scheme should raise some red flags with Vietnam’s regulators and macro policy hawks, and it will be interesting to see if it is allowed to go ahead, and if so, if it actually works.
Vinhomes closed at VND 158,700 on Monday, up 3.19 percent, with 36.9 million shares traded worth VND 579.6 billion (about US$22 million).