"The development of the entire public REITs in China can be said to be very promising," at the 2022 China Real Estate Finance Summit held yesterday, Yan Hong, Academic Vice Dean and Professor of Finance at Shanghai Jiaotong University, analyzed the opportunities and challenges of the development of public REITs in China. He said, "At present, China's public REITs market is still in the stage of exploration and improvement in the issuance, operation and holding mechanism, etc., but we are very optimistic about the future development prospects of China's public REITs, because there is a large demand here, and there are also very rich underlying assets on the supply side."
REITs, as a structured financing tool , is a very important financing means to revitalize existing stocks. It can provide real estate companies with a financing means other than traditional bank or trust financing channels; help real estate companies adjust their liability structure and capital structure through transfer and issuance of REITs, and transfer equity of the property in their hands, thereby achieving light asset operation; it can help investors enrich their products that can be invested in the capital market.
In June last year, the first batch of 9 public REITs products were officially launched, kicking off the Chinese REITs market. At present, China is accelerating the healthy development of REITs in the infrastructure field. Public REITs help innovate investment and financing mechanisms in the field of infrastructure and effectively drive social capital investment.
"In the past year, the development of public REITs in China has been relatively deserted at the beginning to the current hot market acceptance, which shows that the development prospects of the public REITs market in China are still very considerable." Yan Hong believes that at present, it is the time for the development of the domestic REITs market to develop very well. This year, the State Council and the China Securities Regulatory Commission issued a series of policies and opinions on market support for REITs, especially opinions on further revitalizing existing assets to expand effective investment, which played a very positive role in promoting the development of the entire REITs market. At the same time, the China Securities Regulatory Commission issued guidelines for newly purchased infrastructure projects to open a new stage for REITs funds to expand scale and increase overall value through expansion of fundraising.
At present, the Chinese version of public REITs mainly focuses on infrastructure real estate, which has played a positive role in supporting the real economy, especially projects that support local governments, and has received support from many local governments. Yan Hong also admitted that overall, the potential of China's public REITs market is still very huge. "Of course, if we want to further develop and ensure the healthy and sustainable development of this market, we still need further supporting regulations and corresponding tax system arrangements."
According to Yan Hong, the public REITs research team of Shanghai Advanced Finance School of Shanghai Jiaotong University has formed a white paper on the development of China's public REITs market after more than a year of investigation and research.
This white paper lists in detail some good experiences in mature overseas markets that can be used as reference in the domestic market. The first is how to introduce long-term capital . The REITs market is not a fast-in and fast-out operation market. It is actually very suitable for long-term capital to make stable investments. Therefore, to support the healthy development of this market, it is necessary to introduce some long-term capital. Now retirement annuities or insurance asset management are gradually entering this market.
Second, in terms of overall underlying assets management and development model, the domestic market is currently mainly a developer model, that is, the underlying assets are directly operated by the developers, while overseas REITs actually have an external asset acquisition model. The effective combination of these two models is still very beneficial to improving the overall value of REITs, and it should also be used in the future expansion of fundraising.
Yan Hong believes that with the further development of the market, the existing domestic system and mechanism design can be further improved and optimized. For example, as a securities product issued in the open market, protection of investors' interests is a very important key point. In addition, overseas tax neutral plays a crucial role in market development. How to actually implement and systematically guarantee domestic tax neutral policies is also an aspect that can be learned from domestic market development.
This summit is co-organized by Shanghai Jiaotong University Shanghai Advanced Finance School and Chenxi Holdings. It brings together domestic and foreign academic research forces and senior experts from financial institutions, real estate industry and other industries. With the theme of "Empowerment and Integration", it focuses on opportunities in the development and transformation of the real estate and real estate financial industries to promote the stable and healthy development of the industry. In order to promote in-depth exchanges between the guests on various sub-fields of real estate finance, the summit arranged two keynote speeches and three special discussion sessions, and invited guests from related fields of real estate and financial institutions to share insights, respond directly to and discuss in-depth discussions on the current industry's sharp topics, and provide intellectual support for the development of the real estate finance industry.
Author: Tang Weijie
Editor: Zhu Wei
