Encouraged by the changes, local developers say they are considering using the investment tool for their assets The easing of restrictions on real estate investment trusts (REITs) will boost Hong Kong's competitiveness against Singapore and other international markets, according to developers and investment bankers. Wharf (Holdings) assistant director Ricky Wong said it was good to see tax rules and borrowing limits being relaxed under the new regulations. In light of the changes, Mr Wong said the company would consider securitising some of its property assets and selling them to investors. 'But we will only consider selling non-core property assets such as retail and commercial properties in non-prime locations,' he said. However, any such sale will not include the group's core properties in Tsim Sha Tsui as they are the company's major sources of income. Developer HKR International and luxury hotel operator Shangri-La Asia said they would consider the new investment tool. Investment bankers said clients had asked them to prepare REITs. They said local property developers would prefer to list them in Hong Kong rather than Singapore. Anthony Ryan, vice-president of real estate investment banking at JP Morgan Asia Pacific, said the revised version of the Securities and Futures Commission (SFC) regulations matched international practice. He said these were flexible enough to attract property developers. Mr Ryan said the exclusion of overseas assets would not significantly dampen interest. He expected REIT investors would prefer to invest mainly in local property. He believed the SFC would remove the restriction within 12 to 18 months. By then, the market would be more familiar with the product, he said. 'We believe the first REIT will be seen within the next six months,' Mr Ryan said. Liu Che-ning, head of Hong Kong corporate finance at Morgan Stanley, said he was confident the Hong Kong REIT market would be a success. 'With the introduction of the REIT codes by the SFC, there is no reason for local developers to opt to issue the REITs in other markets,' Mr Liu said. Michael Smith, head of real estate at investment bank UBS, was involved in developing the Singapore and Australian REIT markets and said Hong Kong would be competitive with them. 'Insurance companies, Mandatory Provident Fund managers and institutions will all want to invest in REITs as they will provide long-term stable income,' he said However, property consultant Jones Lang LaSalle said it was disappointed about the restrictions on overseas assets in the final code. 'We think this is an important component for a successful REIT market in Hong Kong, the freest economy in the world,' it said in a statement. 'Jones Lang LaSalle is keen to participate in the discussions to help refine the code.'