Research On The Financing Of The Public-rent Housing Construction Based On REITS

Since from the commercial reform of Chinese real estate market, it has become more and more mature.So far, most of the housing supply is commercial real estate, then this becomes a big problem for many families that are not affordable to own a house. In the other end, people speculate on the housing market to make the house prices more unbearable for the common families. To solve this problem, Chinese government intervenes in the property market. But it is hard for it to make the house price going down. And the local governments have faced conflicts of interest when they were solving this problem. So at the same time, the government intends to increase the supply of the affordable houses. Over the last five years, the government has mainly delivered three kind of affordable housing:comfortable housing, low-rent housing, and public-rent housing. The supply target of the three is different. Because the radical increase of the numbers of the unaffordable families in big cities, the demand can’t be met. The government is focused on the development of the public-rent housing right now because it’s most needed. But there is another problem that the government doesn’t have enough money to invest in the affordable housing market. So it needs to attract the private capital to the construction of the affordable housing. These private capitals can help to solving the problem and never go to speculate on the commercial real estate market and ease the pressure of the government.This paper advice the establishing of the Public-rent housing REIT in China with the help of the government. It shall be initiated by the institution supported by the government and raise funds in the public market, after that it hires a professional property adviser to manage the capital. And then the adviser invests the capital to construct new houses or buy second-hand houses to build the assets. This process shall be supervised by the public and the regulators. Then the Public-rent housing will be lease to the qualified families or individuals. The government is responsible for making the qualification standards.This paper also gives advice on what kind of organization the REIT should be how it operates, and where the income comes from. Most importantly, it analyses the yield of the Public-rent housing REIT, it’s this attractive annual yield can make the investor interested in. To achieve this, the government should give special treatment to the REIT, including providing preferential policies in the areas of land, finance, fiscal and tax.