Shanghai, the mainland's financial hub, was set to launch a real estate investment trust this year to boost the slumbering property market, a senior city official said. Fang Xinghai, the director-general of the Shanghai Financial Service Office, said the Pudong district government had finalised preparations for property investment trusts, and the first fund would debut this year, local media reported yesterday. Shanghai is the first mainland city to announce plans for property investment trusts after the central government approved the product at the end of last year. Tianjin Binhai New Area was also reported to have submitted proposals to the central government for a reit. Admitting that the timing was not good for reits, Mr Fang said the new financing tool would provide a catalyst for the sluggish property market. 'The reit is not expected to be popular,' he said. 'We want to launch it first and optimise the product structure as well as work out the regulatory and legal system governing it.' The mainland started considering the launch of reits five years ago. In line with the 4 trillion yuan (HK$4.54 trillion) stimulus package to combat the economic slowdown, the State Council decided to embark on a trial programme to widen property developers' access to funds. 'Reits are necessarily needed to ramp up spending on public housing,' said He Fuqiang, a director with Beijing-based ZHY Money & Bond Market Investment Consulting Centre. 'The regulators will definitely push ahead with the innovations this year.' Reits, which pay investors dividends from rents earned by underlying properties, will provide developers with a new source of funding. Beijing will contribute only 1.2 trillion yuan to the 4 trillion yuan investment expansion plan, while local governments and public investors will take care of raising the remaining amount. The central government plans to allot 900 billion yuan for low-cost housing. Mr Fang also said Shanghai was studying ways to help make the yuan a major currency in international trade settlements. The city was likely to run a trial programme to settle international trades using the yuan, he said, adding that the People's Bank of China and his agency had gained an insight into the issue and would publish details of the policy. Shanghai intends to become an international financial centre.