China’s securities regulator is broadening the scope of real estate investment trusts to include commercial properties such as hotels, offices and shopping malls to help support a “new model” for real estate development and “enrich capital market financing tools”.
The move comes five years after the China Securities Regulatory Commission (CSRC) first approved REITs but limited trust assets to residential property, infrastructure and logistics facilities.
According to government figures, there are now 77 listed REITs with around 207 billion RMB (US$29.28 billion) of total assets.
On December 1, the CSRC opened public consultations on its plan to expand REIT assets to include commercial real estate.
“The move aims to promote high-quality development of the REIT market and enrich capital market financing tools,” the regulator says in a statement.
The proposal outlines the role and duties of fund managers and custodians, due diligence requirements, and information and documents needed to launch commercial property REITs. It also clarifies the CSRC’s supervisory responsibilities.
“The timely introduction of commercial REITs can better leverage the functions of REITs,” according to the CSRC. “This will support the establishment of a new model for real estate development, and further enhance the quality and efficiency of multi-level capital markets.”
The proposal does not set out a timeline to launch the REITs.
