Study On Chinese Real Estate Investment Trusts Risk And Portfolio Strategy

Real Estate Investment Trusts (REITs) is securitization industrial investment fund in essence. It is an important tool of real estate finance. This paper introduces the concept, operation, characteristics and organizational structure of REITs first. Describing the current situation of Chinese real estate trust products and the difference between it and REITs. Chinese real estate trust products is imperfect and not-standardized REITs, Chinese real estate trust products should be further improved and developed.Until now we did not have true Real Estate Investment Trusts yet in China. Each financial investment tool will face the investment risk inevitably, so the study in investment risk of REITs should not be overlooked. This paper focuses on the modern portfolio theory, analyzing the risks can be faced by REITs, seeking the methods to avoid this risks. As real estate investment trusts, REITs can be invested in different regions of real estate markets and different real estate property types, according to this point of view, this paper injectingβcoefficient to Markowitz "Mean-Variance" optimal decision-making model, using this model to analyze REITs diversification portfolio strategie of investments through the empirical analysis. At the same time, we use the monthly data of Chinese real estate indexes to making empirical analysis about the investment strategy of the same property REITs but in different investment areas (Beijing, Shanghai, Shenzhen) and the same region but different types of property (Nanjing residential properties, office properties and commercial property), analysing Hong Kong YueXiu REITs as a example. Finally we introduced the feasibility and the necessity of the reasons for the development of REITs.Through research and analysis, this paper made the following main conclusions:(1) Real estate investment trust expand the financing channels to real estate companies, (2) Real estate investment trusts risk can be dispersed by constructing a portfolio, (3) Diversification of regional location and property type diversification strategy can be effectively dispersed the investment trusts non-systemic risk.We expected to launch the first single-REITs by the end of 2009, now the experimental work is also ongoing. We should conscientiously study the successful investment experience abroad, learning from the developed countries in the development of real estate investment trust. And combining with Chinese national conditions at the present stage and real estate financial markets status quo, developing our real estate investment trust funds that matches Chinese market demand. We believe REITs will facilitate the emergence of Chinese real estate market and the financial markets greatly.