Exclusive | Singapore’s sovereign wealth fund GIC and Chinese mall operator Grandjoy to kick off China’s first listed real estate trust

Singaporean sovereign wealth fund GIC and its long-term Chinese ally, the mall operator Grandjoy Holdings Group, have been selected for a pilot programme that will allow individual Chinese investors to buy shares in rent-yielding properties for the first time.

Grandjoy, the property arm of state-owned conglomerate Cofco, was picked by the securities regulator as one of several firms to try China’s first publicly listed real estate investment trust (Reit), its chief financial officer, Xu Hanping, told South China Morning Post.

“The possible float of the Reit could add an exit route for our real estate funds’ investment, besides matured Reit markets such as Hong Kong and Singapore,” she said, adding that she does not know when exactly the pilot might materialise, because it is up to the regulator.

China’s commercial real estate operators have been calling for years for a Reit to debut on the stock exchange. Like the listing debut of a property estate, it could give Chinese individuals a good return from the property market without them having to cough up the price of a flat, and offers an easier exit channel for office and mall investors who might otherwise take years to recover their money.

Until now, Reits could only raise funds by collateralising properties through asset-backed securities, which limited the scope of investors compared with a shares offering. A listed Reit would also help the investor isolate the risk from the company, by spinning off the financial instrument from its books.

A Peking University report estimated that the country’s Reit market could hit US$1.8 trillion, if legal and tax barriers were removed.