A Brief Discuss On Developing China Real Estate Investment Trusts

Real estate industry has been a pillar and basic component of the national economy recently. Since the real estate industry is a fund-sensitive industry, the finance is important for it.In recent years, we have developed a real estate finance system which mainly counts on the lone support of the commercial banks. But the system seems unsuitable for the real estate finance recently. A document, Further Strengthening the Management of Credit Business of Real Estate (N0.121), was issued on 2003 June. It imposed restrictions on real estate credit and made the capital in enterprise tight. The enterprises had to seek for other ways of finance. To some extent, REITs (Real Estate Investment Trusts) can solve the problem of capital for the enterprises.Recently, REITs become more and more popular in many countries and have developed fast. REITs are listed in Exchange .They are investment plans or trust companies, which specialized in real estate business. REITs provide not only the financial channels outside the bank for the real estate business, but also investment products with stable income and low risk for the investors. REITs originate from America. There are about 200 REITs listed in Exchange in the USA. The total market value is up to more than $200 billion. Since 2000, REITs has developed fast in Asia.Now, domestic introduction and analysis on REITs are focused on feasibility, necessity, barrier and operation mode, proposing establishing native REITs. They frequently elaborate macro-strengths to emphasize the necessity of establishing native REITs, seldom discuss the real estate enterprises' financing difficulty and micro-strengths to emphasize the necessity.No one has analyzed the realistic difficulty of the real estate investment trust when is compared to REITs to prove that the real estate investment trust is unable to take the place of REITs.Developing native REITs is an inevitable tendency.The article is to emphasize the necessity of establishing native REITs on the basis of analyzing the financing difficulty of real estate enterprises, the REITs'characteristics, superiorities, barriers,the realistic difficulty of the real estate investment trust when is compared to REITs.Finally, the author tries to give some advices on establishing native REITs and the realistic choice of quasi- REITs.