Gold-for-property scheme draws scrutiny over financial and legal risks

Gold-for-property scheme draws scrutiny over financial and legal risks

The programme quickly became one of the most discussed financial topics on Vietnamese social media and investor forums.

A newly launched programme by Vinhomes allowing customers to convert gold holdings into property purchases has triggered widespread debate among investors, economists and regulators over its financial structure and potential impact on Việt Nam’s monetary system.

The initiative, announced on May 25, enables customers to convert idle gold into cash through partner jewellery and precious metal companies before using the proceeds to purchase homes at Vinhomes projects.

Under the scheme, customers may choose after three or five years either to retain ownership of the property or receive an amount equivalent to 110 per cent of the value of the gold originally used for the transaction, calculated at the prevailing gold price at maturity rather than at the time of conversion.

The programme quickly became one of the most discussed financial topics on Vietnamese social media and investor forums, with supporters viewing it as a creative way to mobilise idle household wealth while critics warned of systemic and liquidity risks.

Economists warn of ‘goldisation’ risks

Associate Professor Phạm Thế Anh of the National Economics University described the arrangement as resembling a gold repurchase or repo contract.

He said customers effectively sell gold today and are promised the equivalent value of gold in the future with an annual return of around two per cent, while also gaining the option to acquire property outright.

However, he identified several risks associated with the model.

First, he argued that gold is indirectly being used as a payment instrument in real estate transactions, despite existing restrictions on gold-based payments under Vietnamese law.

Second, he warned that the mechanism could encourage 'goldisation' in the economy by incentivising people to value assets in gold terms and increase gold hoarding, potentially weakening confidence in the Vietnamese đồng and complicating monetary policy management.

Phạm Thế Anh also expressed concerns over liquidity and capital allocation.

“Transforming a globally tradable asset such as gold into illiquid real estate assets creates additional market risks, particularly when property prices remain far above average household incomes,” he said.

He further cautioned that if the gold mobilised through the programme does not ultimately return to official reserves, the economy’s resilience against external shocks could weaken.

Another concern relates to the company’s ability to honour its commitments if gold prices rise sharply over the coming years.

“If gold prices surge dramatically as they have in recent years, the company could face difficulties repaying customers unless robust hedging measures are in place,” he said.

Financial structure raises liquidity concerns

Hồ Quốc Tuấn, senior lecturer and director of the Master of Finance and Accounting programme at the University of Bristol in the UK, analysed the programme as a combination of a real estate purchase and a financial option contract.

Under the arrangement, investors simultaneously purchase property while obtaining the right to sell the property back after several years in exchange for 110 per cent of the prevailing gold value.

He said customers would likely choose to keep the property if real estate prices outperform gold prices, while they would opt for repayment in gold-equivalent value if gold appreciates more strongly.

For investors, the primary risk is counterparty risk - the possibility that the developer may fail to meet its obligations in the future.

For Vinhomes, however, the main challenge lies in liquidity management if gold prices rise sharply while property prices stagnate or decline, prompting large numbers of customers to request repayment linked to gold values.

Hồ Quốc Tuấn suggested two possible hedging strategies for the developer.

One option would be to purchase gold or gold-linked financial options on international markets to offset future price increases. Another would involve transferring the gold-related exposure to specialised financial institutions capable of managing the associated risks in exchange for fees or profit sharing.

“Regardless of the strategy chosen, cash flow remains a major issue if gold prices significantly outperform property prices,” he noted.

Vinhomes says risks are fully hedged

Responding to mounting concerns, Vinhomes chief executive Nguyễn Thu Hằng said the programme was designed with long-term calculations and multilayer risk management mechanisms.

She stated that the company had already purchased gold price insurance to protect against extreme market volatility and ensure customers receive the promised value at maturity.

“Vinhomes does not gamble with customers’ assets or its own future,” she said.

According to Nguyễn Thu Hằng, the company has also secured long-term commitments from jewellery and gold trading partners to guarantee sufficient physical gold supply when contracts mature.

The executive argued that fears of another prolonged surge in gold prices similar to recent years may be overstated, citing international forecasts suggesting global gold prices are already near peak levels after years of geopolitical instability.

She added that the domestic gold market is increasingly subject to government stabilisation measures.

Vinhomes also announced adjustments to the programme following strong market interest during the first 48 hours after launch.

Customers may now choose settlement periods of either three or five years while still receiving annual returns of 2 per cent. In addition, the minimum gold-to-property conversion ratio for high-value units has been reduced from 80 per cent to 50 per cent to broaden participation.

The company stressed that the programme targets existing gold holdings accumulated before April 25 rather than encouraging new gold purchases.

“Our goal is to mobilise idle gold stored by households into productive economic circulation instead of allowing it to remain dormant,” Nguyễn Thu Hằng said.

Central bank urges legal compliance

The State Bank of Vietnam on May 29 issued a statement reminding Vinhomes to strictly comply with regulations governing gold trading, foreign exchange management, banking activities and real estate transactions.

The central bank reiterated that gold is not legally recognised as a means of payment in Việt Nam and emphasised that any activity involving gold mobilisation or indirect payment mechanisms must adhere to existing laws.

The regulator also warned that any violations would be handled strictly under current legal provisions.

At the same time, the central bank affirmed its support for initiatives aimed at mobilising idle gold resources for economic development, provided they align with the Government’s broader efforts to curb gold speculation and reduce 'goldisation' in the economy.

Analysts say the Vinhomes programme represents one of the most ambitious attempts in recent years to channel household gold holdings into productive investment assets, but its long-term success will depend heavily on legal clarity, risk management and market confidence.

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