Guangzhou REITs Financing Scheme Design In The Construction Of Public Rental Housing

As a component of the public housing system, public rental housing has been playing animportant role in dealing with the housing difficulties of low-income citizens in the cities.However, governments are always confronted with insufficient funding and financial pressurewhen constructing the public rental houses. Financial problem has become one of the majorobstacles for China’s construction of public rental houses. By contrast, private capitals inChina are actually adequate, but they lack investment channels. Therefore, it will be a Paretoimprovement to introduce private capitals into the public rental housing system throughfinancial innovation, which is a trend for the future development of this system. This paperintended to explore the feasibility and mode of real estate investment trusts (REITs) for publicrental housing in Guangzhou based on China’s institutional environment and the currentsituation of public rental housing in Guangzhou. We attempted to provide an useful solutionto improve the participation of social capitals in public rental housing system.In this paper, we first analyzed the investment and financing problems of public rentalhouses’ construction in Guangzhou, which leading us to a conclusion that there existed largecapital needs for the construction but few funding methods. So innovation for fundingmethods is of significance. After studying foreign experiences in public housing’s financing,we proposed to use REITs to solve Guangzhou’s problem. The conditions for Guangzhou’sgovernment to apply this approach are satisfied, and the profits have market competitivenessaccording to our study on the feasibility, operation mode, costs vs. benefits and risks. Wereach these conclusions through comparison analysis, qualitative and quantitative assumptionsand summarization based on literature review, material and data collection.