Reits aiming to cash in on relaxation of rules
Participants in Hong Kong's real estate investment trusts (reits) believe last week's policy address signalled that rules governing the sector are likely to be relaxed.
Participants in Hong Kong's real estate investment trusts (reits) believe last week's policy address signalled that rules governing the sector are likely to be relaxed.
In his address last week, Chief Executive Leung Chun-ying said the Financial Services Department Council had submitted several policy proposals covering a range of issues, including the regulation of the reit market.
The council recommended rental incomes accrued to reits should be exempt from profit tax.
It also recommended that reits should be allowed to invest 10 per cent of their total assets in "design and build" properties and that the current rule limiting Mandatory Provident Funds to investing a maximum of 10 per cent of their assets in reits should be scrapped.
The Asia Pacific Real Estates Association (APREA) supported the proposed changes.
George Kwok-lung Hongchoy, chairman of the Hong Kong Chapter Board of the APREA and chief executive of The Link Management, said: "The most challenging will be the suggestion that the government should exempt reits from paying profit taxes on rental income. But it is also the most significant proposal. The government will earn increased revenue in the end if the reit market is able to grow."