The Study Of The Necessity Of The Establishment Of The Real Estate Investment Trusts In China

After the reform and opening-up policy, China's real estate market develops gradually with the establishment of the socialist market economy system. With the continuous rising of the housing consumption, the real estate industry reveals its important status in the overall national economy step by step. China has fairly confirmed the real estate industry as the mainstay industry in the national economy .It is because the important status of real estate industry in the national economy that the finance authority in each country attaches much importance to the development of the domestic real estate financial market. Because of immaturity of the real estate financial market, the relative singleness of the real estate financial tools and the relative weakness of the risk-defense capability, it's necessary to introduce the overseas mature financial tools and the real estate investment trusts meets the requirement.After introducing the origin and development of the REITs, the paper begins with stressing on the basic characteristics of the REITs as the financial tool. In the first place, REITs has low relativity with the other financial tools, which has great significance to the defense of the investment risk. In the second place, the relative highness of the dividend of REITs listed company, which wholly surpasses the yield of the ten-year period national debt of America. And with the process of time, the margin between dividend rate of the REITs listed company and the yield of American ten-year period national debt has the tendency of becoming larger and larger. In the third place, compared with the other financial tools, the income of REITs is more stabilized and less risk. In the forth place, over the past 20 years, the increasing of value of REITs equity shares obviously wholly surpasses the rising of the consumer price index, which shows REITs has powerful capability of defending inflation. Next, this paper discusses the essential difference between the products of the real estate trusts in our country and the oversea REITs. It is because REITs has such excellent financial investment attribute that it is quite necessary for China to develop the REITs. As for its necessity, the paper discusses them separately in five aspects. Firstly, the establishment of the REITs can widen the financing channel of the real estate industry in China; it can not only satisfy quite a part of the capital requirement of the real estate company, but also change the maximum dependence of the real estate company on the bank capital for the moment and disperse the banking risk in China. Secondly, REITs purchases the mature commercial real estate, which accelerates the capital turnover of the investor, promotes the perfection of the commercial real estate managing in China, thereby avails the standardized development of commercial real estate industry in China. Thirdly, affording the middle and small-sized investors with the new and effective investment channel, distributing the mass deposit. Fourthly, establishing the cheap hiring housing REITs, this can promote the development and the perfection of the cheap hiring housing system in China. Fifthly, REITs can play an important role in the process of divesting the non-core real estate assets.In the end, this paper analyses the operation mode of REITs in China briefly.