Regulations require investment only in Hong Kong property
Property owners will be able to apply to sell assets through real estate investment trusts (REITs) from next week after the Securities and Futures Commission (SFC) announces the regulatory framework, according to a source familiar with the situation.
After market consultation, the SFC has modified some of its original proposals but insisted on keeping the most controversial which requires REITs to invest only in Hong Kong property.
Other sources said Cheung Kong (Holdings), Sun Hung Kai Property (SHKP), Swire Pacific and the Housing Authority were all likely to apply to launch REITs.
A Cheung Kong spokesman would not comment last night, while an SHKP spokesman said it needed to wait to see the SFC rules and Swire could not be contacted. The Housing Authority last Friday announced it wanted to sell its 130 shopping centres and 100,000 carparks in a REIT-like company listed on the exchange in 2005.
REITs are investment vehicles that pool property assets to offer a stable income flow from rents. Tax advantages and market pressure for firms to allocate capital more efficiently have been a driving force behind their development in markets such as the United States, while in Japan, banks needing to clear dead assets from their books have provided stimulus.