Acuity funds ‘spiritual’ real estate

Acuity Funding continues to make the national news in Vietnam, this time in relation to its willingness to finance ‘niche’ investment opportunities in cemeteries.

A five square metre grave site in some areas of Vietnam has the same price as an apartment and customers can also buy a grave area in installments, according to a report in a leading Vietnamese newspaper.

“The cemetery real estate market attracts an Australian financial institution to provide capital,” the newspaper report said.

“This is an area of high return investment. We are currently funding four projects in Dong Nai, Ba Ria – Vung Tau and the Western region,” a representative of Acuity Funding shared with the newspaper.

The newspaper commented that a “freeze” in the commercial real estate market had recently been caused by tight policies, credit restrictions, high interest rates, etc. However, information about a new niche market – burial plots – “sprung up in the southern region, namely the satellite provinces around Ho Chi Minh City (HCMC)”.

“This niche is collectively known as spiritual real estate, and the actual market has been quite active over the past few years. There are many reasons for this exciting market,” the report continued.

“Firstly, in the past, the purchase of cemetery land only took place when the family had a bereavement, often in a hurry, sometimes without a choice. Today, fearing the scarcity of burial land along with economic development, the desire to choose cemetery land near the city centre, with good feng shui, to visit … means many people tend to buy early.

“Secondly, from the end of 2021 to the first half of 2022, economic investment channels experienced many big events, and investors became wary when considering more conventional real estate investment channels.

“Meanwhile, cemetery real estate has low investment costs and high profits. Basically, cemetery garden real estate is appropriately priced and does not require further investment to improve.

“Not to mention, the supply is scarce, so every year, this segment’s profitability grows. The liquidity of this product is also good because the demand for ownership and use is high, which is also the reason the market is active.”

Acuity’s spokesperson told the newspaper that due to its characteristics it is difficult to get funding for this segment from banks, even though the demand is strong and even increased sharply after the COVID-19 pandemic.

“The reason may be that the bank does not want to lend money for spirituality, and most of all, title on cemetery real estate has not been separated, so it is difficult to evaluate and build a credit contract.

“The demand is growing for people with money, and for insurance companies, project investment brokers and families.

“According to a representative of Acuity Funding, the current price of a grave site is equal to that of a small apartment, although the area is only about four to five square metres.

Cemetery real estate is priced up to VND 300-400 million per lot.

Customers not only buy land to make graves, but also spend a lot on maintenance for decades. While the investment cost is much lower than compared to an apartment, cemetery real estate has very uncomplicated foundation infrastructure.”

The newspaper reported that Acuity Funding “is a financial institution established in 1993 in Sydney, specializing in large-scale project finance. Acuity has been present in Vietnam since 2018, working with the government, banks, large corporations, and project owners with a scale of value from $US100 million for each project.

Acuity is currently supporting a minimum capital of $US50 million, equivalent to VND 1,200 billion for projects, including spiritual real estate projects.

Although the investment cost per grave site is not high, the capital requirement for a cemetery project is not small, including ground clearance, storage of bones, construction of a memorial area, etc.

“Acuity’s loan policy is towards serving the community, so investors often agree to contribute a portion of profits back to society and charity work,” the article said.

“Of the 11 countries Acuity is operating in, Vietnam is the most active in this spiritual real estate sector. Partly due to the culture of the Vietnamese people, and partly because market conditions stimulated investors to find new investment channels.”

In fact, investors around the world have many different reasons for investing in cemetery park real estate, especially in family graves, according to the article.

One reason, according to the newspaper article, is that cemetery real estate experiences sustained increases in capital value, “never falling”.

Even in the US, from 1986 to 2017, the Consumer Price Index was always beaten by the level of growth in burial costs. In Asia, specifically in China, cemetery land prices surpassed $US16,000 per square metre, which is twice the average of the growth experienced in housing prices in Shenzhen – one of the most expensive cities in China.

In the southern region, following the introduction of a regulation to move graves out of Ho Chi Minh City, many projects emerged including Sala Garden, Binh An Cemetery Garden, etc.

In general, investment in cemetery land is considered a potential niche market for many people who lack capital but want to make a profit from the land.

Although it is a niche market, cemetery garden real estate attracts investors because of its sound legal documentation and high liquidity.