Residential propety

Launch of the first residential REITs in China

SHANGHAI, May 28 (Reuters) – China’s first public real estate investment trusts (REITs) based on residential properties will soon be launched, as regulators step up efforts to channel fresh capital into the struggling property sector and help a virus-hit economy.

The Shanghai and Shenzhen stock exchanges have each accepted an application for residential REITs backed by rental income from affordable housing, according to the exchange documents.

The launches will broaden the scope of investments by Chinese REITs, which were based on infrastructure projects such as toll roads, logistics centers and sewage treatment plants.

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But Beijing has no plans yet to allow REITs to channel money into commercial properties such as office towers and shopping malls – common assets of REITs around the world.

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

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

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

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

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

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Reporting by Jason Xue and Andrew Galbraith; Editing by William Mallard

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