Apartment REITs Coming to China
iFeng: 住房租赁REITs酝酿启动 证监会相关政策在制定中
In essence, REITs (Real Estate Investment Trust) is a way of asset securitization. Some real estate companies have tried to launch “category REITs” products. However, these “category REITs” products mainly for institutional investors, the real public offering REITs products have not yet launched.
China Real Estate Development Group Chairman Meng Xiaosu previously disclosed in public, recently the China Securities Regulatory Commission to China Securities Industry Foundation of the Association of the name of the organization organized a special committee to promote real estate securitization. The reporter also learned that the current domestic long-term rental apartment management enterprises in the active contact with the SFC issued housing leasing asset securitization projects, especially the REITs project.
…Driven by the relevant policies, the industry is expected, housing rental market space will be very broad. Studies have predicted that in 2020 the size of the domestic housing rental market up to 1.6 trillion yuan, 2030 can reach 4 trillion yuan. First-tier cities in the net population inflow, especially in the north of the three major cities of the housing rental market to an average annual rate of 15% growth.
For those interested, there’s also a poll on fertility and real estate under the article, asking readers if they plan on having 2 children, reasons for and against, if they would move with two children, how large an apartment they would want with two children. Note the link goes to iFeng Wuhan. There are probably multiple surveys for different cities.
Global Times: Time is right for China to embrace REIT benefits
The Chinese government has recently called for ramped-up development of the home rental market in bigger cities. A total of 12 cities including Guangzhou, Zhengzhou and Hangzhou have been designated for a trial program that aims to give renters the same rights as homeowners so as to jumpstart China’s rental market. This could provide impetus to set up the country’s REIT market as well, as it will encourage the professional leasing business, which can ensure yields from securitized property assets. It’s noteworthy that the shift from reaping rapid gains by buying land for development toward earning long-term rewards through leasing businesses will fuel demand for REITs over time and ultimately result in a breakthrough in the country’s efforts to set up its REIT market.
Progress with REITs could begin with a pilot program on a city-by-city basis, as it will be easier to manage. And various participants such as banks and lawyers can consider a workable framework for a nationwide launch.