China is looking at a pilot project to allow property developers to raise fund through investment trusts, a move to ease credit crunch pressure on the real estate market hit by a slowing down economy.
A Chinese senior official said the Real Estate Investment Trust (REIT) would help to expand the credit lifelines for developers, who until now depended primarily on commercial banks for funding.
Huo Yingli, deputy director of financial market department, People’s Bank of China, told a press conference on Tuesday that the central bank had formulated a REIT scheme, which was pending further deliberations with related ministries and government agencies to fine tune the proposal.
Huo said the proposed scheme would soon be submitted to the State Council, China’s cabinet, for consideration.
He added the proposed REIT scheme would emphasize risk prevention, sound monitoring and control mechanism.