The Development Of Real Estate Investment Trusts And Real Estate Industry In China

After giving a brief introduction on the concept of REITs and presenting the capitaldemand by domestic real estate companies, this article analyzes the advantages which realestate investment trusts (REITs) will have on the development of China's real estateindustry, examines the obstacles REITs will confront in China, and give several practicalsuggestions on its future development in China.As a well-developed financing measure in other countries, REITs has attracted manyprofessionals' discussion because of the recent stringent adjustments of domestic real estatefinancial policies and successful REITs IPOs in Hong Kong last year. After reviewing thehistory of REITs, we will see that to establish the REITs market in China will have manyadvantages on the development of China's real estate industry, such as, to perfect ourcountry's real estate financial market structure, to decrease the excessive demand for loanby real estate companies, to enhance the specialized operating level of this industry, towiden the real estate financing channel, and to act as a new investment vehicle for theinvestors.On the other hand, the real estate industry in China is still in a real estatedevelopment oriented stage, while the REITs market was designed for income introducingproperties. Besides, the domestic limitations on legal, taxation and accounting, willbecome obstacles for REITs' development in China in a short run.Considering the above factors, this article attempts to present correspondingdevelopment suggestions and countermeasures. To establish a well-organized REITsmarket, we need to study the international advanced experiences, and to set up a propergovernance and legal environment combining with our actual conditions. Also, we need totrain REITs talents and improve the industry information disclosure system. At the sametime, we shall explore the possible way to development a REITs market with Chinesecharacteristics.