On Real Estate Investment Trust And The Innovation Of China's Low-cost Financing Model

Based on the analysis of low-rent housing finance difficulties in our country at present, this article introduces the REITs to build the low-rent housing financing model in China. And then the article analyses the feasibility of adopting low-rent housing REITs in our country, including the favorable and unfavorable factors. The favorable factors include relevant national policies, huge saving deposits, foreign REITs operational experience, the market conditions of our country. Adverse factors include the legal and human obstacles in our country and the policy risk, yield risk, and project risk we may face. And then, the article briefly describes the REITs modes in two different conditions. Finally, taking Shanghai for example, an empirical analysis in which IRR is used to substitute the future expected return rate is used to demonstrate the possibility of introducing low-rent housing REITs in Shanghai. The conclusion is that when there is no government rent subsidies, it is possible to introduce the public rental REITs but impossible to introduce low-rent housing REITs. Only if the government offered rent subsidies, it would be possible to introduce low-rent housing REITs. And this paper shows that it will use less money to subsidize the construction of low-rent housing in short period, but it is more rational for the government to subsidize the rent in the future long period.