HOW FAR IS THE CHINA REITS FROM THE INTERNATIONAL STANDARD REITS?

Abstract

The Chinese REITs (C-REITs) market has been widely discussed for more than a decade since after a few Asian countries opened up their REITs market. Most researchers and experts previously expressed that there was a great potential in C-REITs market, yet not much progression shown in the last decade. Finally in Jun 2015, the very first public offered REIT was listed in domestic China stock exchange, which offered the author a motivation to review the progression of C-REITs market. This paper focused on the development of C-REITs market. Besides discussion on current economic and legal environment for C-REITs development, the paper also evaluated major obstacles that hurdles its progression. The incomplete legislative framework, slowdown in China’s economy, competition from other financial products, and lack of professional talents appeared to be the main challenges that need long time to resolve. Along the way, a few quasi-REITs have been introduced and two meaningful cases were selected to discuss in detail. At the last, the future prospects of C-REITs were assessed. Although REIT itself enjoys competitive advantage and good opportunities are indeed existed in Chinese real estate market, C-REITs will struggle a few more years to achieve the international standard. Once the proper legal regime complete and economic conditions pick up, C-REITs market will enter a rapid development stage.