What's good for the goose should be good for the gander when it comes to sound economics. Hong Kong property firms seem set to offload substantial parts of their property holdings through a new investment product that allows investors to earn a steady return from rental income. Real Estate Investment Trusts (REITs) are common in other developed markets, but in Hong Kong firms have jealously guarded property assets, generally keeping them on corporate balance sheets. What has changed is not the long-standing belief of ethnic Chinese in the long-term value of property, but hard economics. Similar pressures are forcing the government to reassess its fiscal norms. Like much of Hong Kong's corporate players, the public sector has avoided the kind of financial re-engineering that radically changed the way firms and governments in many advanced economies managed capital assets over the past 20 years. Institutional share ownership and the pressure to deliver high returns has seen commercial property assets divested by big companies and bought by dedicated funds or small investors through REITs. The change was driven by market forces, compelling firms to minimise capital employed in their activities and a preference for specialising in core activities. Similarly, fiscally constrained governments, facing ageing populations and rising welfare claims, have sold non-essential property assets in order to reduce budget deficits. Booming Hong Kong managed to avoid this worldwide revolution in both public and corporate sector financial management for most of the 1990s. The reasons are not hard to see. High stock prices and consistent asset inflation meant that firms could easily raise capital, and buoyant returns meant they had little incentive to offload assets. Deflation has radically changed this. Falling asset prices have seen firms' property profits collapse and increased their cost of capital. The most enlightened see selling off property holdings as a rational means to restore profitability and a more efficient use of capital. The message has been picked up by the public sector with the cash-strapped Housing Authority planning a $20 billion privatisation of publicly owned shopping centres and car parks through a REIT share offering. It may be doing this under duress and there are sound arguments that the government would have been better off directly selling assets rather than grouping them in a REIT. However, the precedent of public sector bodies divesting lumpy, cash-consuming assets is a good one, since it establishes an important principle of balance-sheet management for government bodies. Should the same parsimonious attitude to public capital be applied to building much of our core infrastructure, the boost to the bottom line of Hong Kong Inc could be huge.