[photopress:property_REIT_2.jpg,full,alignright]China could kick-start a property trust market next year to give its pension funds and insurers an alternative to volatile stocks and meager returns from government bonds, according to an industry group.
The move could lead to the listing of as much as $60 billion worth of buildings in the form of real estate investment trusts (REITs) over the next five years.
Stock market watchdog China Securities Regulatory Commission (CSRC) sent a delegation to Australia in May to study property trusts, and is working with other authorities including the central bank to draw up legislation.
The trusts will probably be externally managed, in line with the Singapore and Hong Kong model, said Peter Mitchell, head of the Asian Public Real Estate Association, which is advising the CSRC on the matter.
[photopress:property_REIT_1.jpg,full,alignleft]China is pushing ahead with REITs because insurers and pension funds are desperate for the stable returns they offer to match long-term liabilities. REITs tend to yield more than bonds, and offer capital gain if property values rise, but are typically less volatile than stocks.
Source: The Guardian London