China Business

Apr 1, 2006

REITs becoming more popular in China

BEIJING - Real estate investment trusts (REITs) and the securitization of real estate loans are becoming hot topics among real estate investors and developers in China.

It is expected that more commercial real estate projects in the mainland will seek financing by listing REITs on the Hong Kong bourse this year. By the end of last year, three mainland REITs

had been listed in Hong Kong, with market capitalization of US$3.1 billion. Their capital returns are about 5-6%.

For mainland real estate developers, REITs are still difficult to operate in spite of their advantages. This is mainly because of the absence of sound systems for regulating them, and dual taxation levied on returns from REITs when the investment company gets trust yields and distributes yields to the investors. But foreign fund companies with a high level of capital are still in favor of REITs, said Liu Xiaoguang, chairman of the Beijing Capital Group.

(Asia Pulse/XIC)

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