Property funds, unlike other mutual funds, have the objective of mobilizing the funds from general investors by issuing unit trusts and then investing the fund in real estate, residential projects, or other property-linked securities allowed by law. Property funds focus on investments in property that return a regular income rather than buying and developing property for future sale or trade.
Under Securities and Exchange Commission regulations, property funds in Thailand must be closed-end funds with a minimum capital of THB 500 million. Furthermore, property funds are classified into two types: 1) specific property funds, which clearly specify the property or properties to be purchased or leased in the prospectus; and 2) nonspecific property funds, which only describe the type of property to be acquired in the future. Nevertheless, both fund types are required to invest at least 75% of their net asset value (NAV) in real estate—or the leasehold rights of real estate—which must be located in Thailand and be at least 80% constructed. After acquiring property, the property funds must hold the property for a minimum of one year. The regulations concerning property funds do not, however, allow investing in dormant land.
Property funds are required by regulation to pay a minimum of 90% of the annual net profit as dividends to the unit trust holders.