Vietnam's tokenised property platforms fade, highlighting transparency concerns

Such platforms, which once promised novel opportunities for fractional property ownership, have ceased operations in recent months, signalling a shift in investor sentiment and raising concerns about the sustainability of such ventures. One example is Moonka, an app that pioneered the use of blockchain technology in real estate transactions.

Moonka recently suspended its money-raising activities for real estate projects, which was a setback for its purported vision of empowering investors through shared property ownership.

The platform had subdivided properties into 1,000 shares, enabling customers with modest budgets to participate in co-ownership. However, despite operating for two years, it only successfully raised funds for three projects located in Bao Loc, Bao Lam, and Can Gio.

The returns on these investments remain undisclosed. At the time of writing, visitors to Moonka's website will find a list of "waiting for opening" projects, including Van Phuc City, Sandy Vung Tau, LakeView Farm, among others. However, it is notable that additional information regarding new projects, as well as details about the founding and operational teams, appears to have been removed from the website.

This lack of available information raises serious questions about the current status and transparency of Moonka's operations. The retreat of shared property investment platforms is not limited to Moonka.

Industry observers note a broader trend of platform closures and suspensions during the first half of this year, marking a downturn after a period of rapid expansion from 2020 to 2022.

Revex, another shared property investment platform that previously garnered attention, has also encountered difficulties.

The platform, backed by investment from CenGroup – a local real estate services provider, sought to enable individual investors to contribute capital for collective real estate acquisitions starting from VND1 million ($41.7). CenGroup injected $1 million in Revex in 2020.

Built on a smart contract platform underpinned by blockchain, Revex aimed to revolutionise the industry. However, it has since halted its operations, leaving investors uncertain about the future of their fractional ownership.

These developments have not gone unnoticed by regulators.

In late 2022, the State Securities Commission (SSC) issued a warning to investors regarding unlicensed websites and trading applications, including some shared property investment platforms like Infina, Tikop, and Tititada, among others.

“Investors may face risks if disputes arise, and they are not protected by securities laws to safeguard their rights and interests. The SSC advises investors to exercise caution when engaging in securities transactions through these trading apps, as investors bear responsibility for potential risks that may occur,” the regulator said.

The cautionary notice emphasised the need for vigilance when engaging with these platforms and underscored the absence of proper regulatory oversight. Infina, formerly known as Real Stake, divided properties into 80-150 shares, providing opportunities for smaller investors to participate in the real estate market.

Tikop accepted investments starting from VND50,000 (about $2), promising annual returns of 10 per cent. Market watchdogs have emphasised the inherent risks associated with shared property investment models in Vietnam.

Tran Khanh Quang, CEO of Viet An Hoa Real Estate Investment, cautioned that the complexity of shared ownership, coupled with a lack of legal frameworks, posed significant challenges. “While shared property investment endeavours may offer indirect market participation for small-scale investors, these models face hurdles such as limited decision-making authority and illiquidity, particularly during market downturns,” he said.

In the same vein, economist Dinh The Hien further underscored the importance of a robust legal framework in the Vietnamese market.

“While technology-driven solutions have made strides in the global real estate sector, Vietnam's nascent market lacks the necessary legal safeguards to protect investors,” he said, warning that some shared property investment models attracted novice investors with high-profit commitments, but often lacking legal backing, which could expose investors to substantial risks, as witnessed in the collapse of the condotel market.

Annie Woo, regional director, Integrated Real Estate Advisory Services in Asia Savills said, “Real estate tokenisation offers advantages but carries risks. Risks include counterparty, liquidity, regulatory, and infrastructure risks.”

For instance, if the real estate is never sold for any reason, token holders may be stuck without any recourse. Therefore, the liquidity risks for token holders may be higher than typical creditors or minority shareholders, who can exercise their rights enshrined in legislation to seek recourse.

Investors should clarify counterparty identities, assess liquidity prospects, conduct due diligence, and consider regulatory and infrastructure risks when venturing into real estate tokenisation.

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Real estate tokenisation risks must be accounted for While real estate tokenisation offers advantages, it also presents potential risks. De-tokenisation is an important concept which affects the ability of the token to hold its value. It is the litmus test for token holders to validate the legal structure by exercising their rights to redeem the underlying title deed anytime.