China Reits Listed On The Conditions And Obstacles

The American REIT market is the most mature REIT market in the world, with the biggest market capitalization and the longest history, which is characterized as taxes preferences. Whilst REIT markets in Asia, comparably less mature, issued its first REIT in Japan in 2001, the major characteristics of which is REIT special acts were generally approved in these countries and areas. Real estate bond-like securities, which are in robust demand in China, are completely different with REITs. China printed its first step to REIT by beginning the preparation work for pilot REIT.There are a lot of favorable conditions while still more hindrances for REIT IPO among the present laws, real estate market and financial market in China. The conclusions of this thesis are listed as follows:First, the present favorable conditions in China are: 1. favorable macro policies; 2. the return of assets in China real estate market are commonly higher than the average level in the global REIT markets; 3. the necessary institutional investors have appeared; 4. the lack of choices of investment vehicles, the great capability in the future financial markets and the comparably better liquidity in security maket and capital market.Second, the present major hindrances in China are: 1. Trust Act, Company Act, and Investment Fund Act in China hinder the REIT IPO; 2. the slowdown of real estate market; 3. the unreasonable tax structure in real estate industry 4. the lack of professional team; 5. the high risk and the weak supervise system in security markets.Of the favorable conditions no.1 is the most fundamental; while of the hindrances no.1 is the most disadvantageous. The REIT Special Act should be approved before the first REIT is issued. Further more, the pilot REIT can offer some experiences and lessons for REIT IPO.