Discussion On Real Estate Investment Trusts In China

Real Estate is one of national essential industries. It plays an important role in the development and promotion of national economy. However, Chinese financial market for real estate is not mature enough to support its healthy and long-term development. In fact, bank loan turns to be the exclusive channel to finance real estate projects, which leads to a dangerous situation that the risk of real estate may transfer to commercial banks. Therefore, we explore various solutions to the problem.According to the successful experience of United States, Real Estate Investment Trusts (REITs) is a good choice. In America, REITs shows a satisfying performance. The rate of return of American REITs is even higher than the return on investment of fixed-return security, such as national security. Well, in China, various financing measures, such as bank loan, IPO and real estate trusts show different draw backs. In contrast, necessary conditions for the development of REITs in China have been satisfied. So, we need to take advantage of favorable environment to develop REITs and promote Chinese real estate market. The article below introduces the basic academic information of REITs, analyzes the current situation of Chinese real estate financial market, then explores the possibilities and significance of REITs in China, and finally provides some constructive suggestion.