China’s nine pilot Reits are oversubscribed on first day of offering
- Currently, only infrastructure companies are allowed to launch Reits
- Reits launched on Monday are aiming to raise a combined US$5.3 billion
China’s first nine real estate investment trusts (Reits), launched as a pilot scheme, were greeted with enthusiasm by investors on Monday.
The tranches offered to the general public were all oversubscribed on the first day of the offering, according to sources close to the Shanghai and Shenzhen stock exchanges. The subscription is expected to end on Wednesday.
Currently, only infrastructure companies are allowed to launch Reits. Property developers could be allowed to do so soon, depending on the success of the pilot.
“The first nine Reits, which carry low risks and generate long-term stable returns, have obviously attracted thousands of individual investors,” said Wang Feng, chairman of Shanghai-based financial services company Ye Lang Capital. “New investment products always trigger buying sprees [in mainland China] during trading debuts, because investors believe the first batch of products or companies are the best in terms of fundamentals,” he added.
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The pilot scheme will be expanded to other property sectors after the first Reits prove to be successful, said George Xiong, an executive director with JLL China’s valuation service unit. “Reits are the favourite investment choice of investors with low-risk appetites,” he said. “The market potential in China will be huge.”