Real Estate

China to Launch First Residential Property REITs Soon

 

Applications have been filed at two mainland stock exchanges for China’s first public real estate investment trusts (REITs) based on residential properties.

The move appears to have been spurred by financial officials anxious to inject fresh capital to revive the property sector, which has been hit hard by Covid lockdowns and government efforts to reduce the massive debts accumulated by leading developers such as China Evergrande.

Stock exchanges in Shanghai and Shenzhen each accepted an application for residential REITs backed by rental incomes from affordable housing, exchange filings show.

The launches will expand the investment scope of China’s REITs, which have been based on infrastructure projects such toll ways, logistics centres and sewage plants.

 

ALSO SEE: As China Reits Gain Traction, Regulators Mull Expansion – Caixin

 

But officials at the Beijing exchange have no plans yet to allow REITs to channel money into commercial properties such as office towers and shopping malls, which are common REIT assets globally.

REITs are a collective investment scheme that sells shares in a trust that owns a collection of properties or infrastructure assets.

They can help China broaden funding sources for rental housing projects and help solve the problem of housing affordability, China’s securities regulator and its state planner said in a statement late on Friday.

“It will also help prevent and reduce major risks, and maintain stable and healthy development of the real estate market,” said the regulators, publishing rules for the issuance of rental apartment REITs.

China this week issued guidelines to expand infrastructure investment by freeing up capital locked in existing projects, and identified REITs as one of the tools.

Asset manager CICC Fund submitted an application for residential REITs to the Shanghai Stock Exchange, while Hotland Innovation Asset Management Co applied to launch a similar product via the Shenzhen bourse.

 

• Reuters with additional editing by Jim Pollard

 

 

 

ALSO on AF:

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

Recent Posts

Easing Covid Rules and Growth Focus Lure Investors Back to China

Relaxed Covid rules and economic support statements are reversing earlier outflows from China's equity markets.

1 hour ago

China Job Confidence Lowest Since 2009 – Survey

Nearly half of households surveyed by the PBOC in the second quarter think employment prospects…

3 hours ago

China Phone Makers Fill Gap Left by Apple, Samsung in Russia

China's smartphone firms have gained ground in the Russian market, says retailer M.Video, after Western…

3 hours ago

India Cement Maker Pays For $26m Russian Coal Cargo in Yuan

UltraTech Cement is bringing in 157,000 tonnes of coal from Russian producer SUEK and paying…

3 hours ago

China Denies Its Firms Backed Russia’s Military in Ukraine

China's Embassy in Washington said it has not provided assistance to either party in the…

7 hours ago

Asia Stocks Slump as Global Recession Fears Deepen Gloom

Dismal consumer confidence data from the US sent Wall Street plunging and Asian markets followed…

9 hours ago