Tianjin lays groundwork for first China reit
The northern city of Tianjin aims to be the site of China's first domestically traded real estate investment trust (reit) and has applied to the central government to establish a pilot programme, according to the city's mayor.
At a ceremony earlier this week marking the launch of Lingrui Asset Management, a real estate investment company, mayor Dai Xianglong extolled the benefits of real estate investment trusts which have gone through periods of intense popularity with investors at different times in the United States, Australia, Singapore and Hong Kong.
'The proposal is at a very early stage but the government really wants to encourage this as a way of attracting capital and investment, particularly in the Binhai New Area,' said Daniel Yin, the CB Richard Ellis managing director for Tianjin.
The Binhai New Area, a massive economic development zone being built in Tianjin, is expected to be a platform for a range of technological and financial pilot projects, including a trial currency-trading programme.
A reit is a publicly listed investment vehicle based on the rental income of a collection of properties and functions much like a corporate bond in most markets.
Although mainland assets have been used to form overseas-listed reits in Hong Kong and Singapore, none are listed domestically.
There is no regulatory or legal framework that would allow such a mainland listing and pension funds and insurance companies, which are large reit investors in other markets, are not formally allowed to invest in real estate.
Domestic and foreign property players have been lobbying hard to get the government to establish the necessary structures.
Lingrui Asset Management has established a fund with one billion yuan of industrial and logistics assets, primarily in the Binhai New Area, that it hopes will become the country's first proper reit.
