Hong Kong And Singapore REITS Markets And Their Listed China-based REITS Analysis

With fast growth of Chinese economy, China real estate market has beengoing through a rapid growth period of past10years. Real estate financingrequires large amount of capital and is usually long term. China real estatedevelopers’ main financing method is still traditional indirect financing, likebank loan and their exit strategy is also simple. With central government’stightening of property-market regulation policy, the risk of depending onindirect financing is more and more obvious. Thus, it is essential to buildingup diversified financing system, which helps to decentralize risk and makemarket transparent.Real Estate Investment Trusts (REITS) is securitization of real estate.Back of rental income and potential property value increase, REITSdistribute required percentage of profit to investors as dividends. Liketraditional stocks, REITS are publicly traded, which provide goodopportunity for small investors to invest in real estate. REITS develop fast inAsia with major countries and regions like Japan, Singapore, Hong Kong andTaiwan all set up own REITS markets. There are four China-based REITSlisted in Singapore and Hong Kong with high degree of acceptance.By analyzing Singapore and Hong Kong REITS markets’ return-riskprofiles and in comparison with more matured market-USA, the writerfound that the interrelationship between REITS return and that of other assetsvaries across countries. Focus on3listed for more than1year China-based REITS, the writer found well-structured China-based REITS can performwell, which contribute mainly to good and diversified backed assets withhigh growth potential and professional management. In combination ofanalysis of obstacles in developing REITS market in China, the goal of thisessay is to contribute to the regulation setting up future China REITS marketand help management who will like to list properties as REITS.