An employee fixing the model of a property project at a recent housing expo in Hangzhou. (Liang Zhen / For China Daily)
Plan goes to State Council for nod after green light from ministries
China's real estate investment trust (REITs) plan is now in the last lap of approval from the State Council, after getting the green light from the concerned ministries, sources familiar with the matter said on Wednesday.
"If everything proceeds as anticipated, the first batch of REITs may be launched in the second half of this year. Only institutional buyers would be allowed to purchase the REITs initially," the source said on condition of anonymity.
In August 2009, a special team, led by the central bank and comprising of 11 ministers, was established to speed up the research and development of REITs in China.
According to the source, Shanghai would be the first center to roll out an unlisted REIT. The instrument would, in all probability, be supported by State-backed companies like Waigaoqiao, Lujiazui, Jinqiao and Zhangjiang, which own office buildings and warehouses in free trade zones.
Though analysts have expressed concern that the recent realty curbs may hamper REIT growth, property consultant DTZ Director for Valuation and Advisory Services Hu Feng feels that much of it would depend on the structure of the REITs.
"If the realty packaged into the REITs is low-rent housing, it would help the government to raise money to build more affordable homes for low-income families. More supplies would also ease the pressure on soaring property prices," said Hu.
Qin Xiaomei, chief researcher with property consultancy firm Jones Lang LaSalle Beijing expects REITs to help in channeling funds to the healthy commercial sector rather than the congested and sizzling residential market.
