First China Reit creates template for future deals

Author: | Published: 1 Feb 2006

The recent listing of Hong Kong's first real estate investment trust (Reit) made up entirely of mainland Chinese properties heralds a ground-breaking step in the development of the nascent Reit markets on both sides of the border.

For Hong Kong, the deal has helped an emerging asset class in the territory to evolve. Impressively, it was launched less than a month after the long-awaited Link Reit – which packaged only local assets – tested local appetite for this new product for the first time.

In China, despite a rapidly urbanizing population, in turn making property a potentially attractive investment, challenges such as high taxes, close scrutiny over repatriating profits and unclear ownership structures have discouraged some foreign investors from buying physical real estate assets. At the same time, moves by Beijing to cool the sector by clamping down on property-related lending have fuelled interest by developers in finding new ways to raise...