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With the first wave of commercial Chinese real estate investment trusts (REITs) set to launch in the next two years, Greater Bay Area assets are likely to be in strong demand, according to Deloitte China.
“GBA assets will likely be oversubscribed,” according to Ryan Wu, deputy managing partner for Hong Kong Chinese enterprises services with Deloitte China. He was speaking at the recent APREA GBA Conference on the fast-growing C-Reits market, which has recently expanded to include commercial properties.
On December 1, China’s top economic planning agency, the National Development and Reform Commission (NDRC), released an updated eligibility list for C-REIT programmes, adding commercial real estate such as shopping centres, hotels and office buildings that can be securitised and sold to investors. The list now covered over 10 categories, ranging from industrial estates and data centres to government-subsidised rental housing projects.
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At a recent press conference, an NDRC representative said the aim of the expansion was to “better promote the role of infrastructure Reits in supporting the real economy”, aligning with China’s broader push for high-quality urban development, urban renewal and measures to boost consumption.
China’s pilot C-REITs, also called infrastructure REITs, were launched in 2021, allowing publicly offered funds to invest in income-generating infrastructure assets and distribute returns to investors from the underlying operating cash flows.
By the end of last month, China had nearly 80 C-REITs that have raised more than 200 billion yuan (US$28.3 billion), according to Cushman & Wakefield.
“China’s REIT market has demonstrated remarkable growth, expanding its market value by approximately 85 per cent last year and securing a position among the top three REIT markets in Asia for the first time in 2024,” said Francis Li, international director and head of capital markets in Greater China for the firm.
An aerial view of the Haikou Jiangdong New Area in the southern island province of Hainan. Photo: Xinhua alt=An aerial view of the Haikou Jiangdong New Area in the southern island province of Hainan. Photo: Xinhua>
“With only four years of history, the C-REIT market remains relatively young compared to mature markets such as the US and Japan, which highlights significant potential for future growth as the market matures and diversifies to include a broader range of investors and asset classes.”
The real estate segment of C-REITs accounted for 54 per cent of the total issuance size, according to Li, with infrastructure assets in areas such as retail, rental housing and logistics among the main growth drivers.
C-REITs offer relatively steady income and help diversify portfolios, according to Cushman & Wakefield. Prospectuses for real estate C-REITs projected an average dividend yield of 5 per cent in the first year of listing, a significant spread over government bonds, the firm said.
The retail sector has seen 12 listings that have raised a total of 30.3 billion yuan. Joy City Property, which was taken private by its holding company Grandjoy Holdings late last month, issued a consumer infrastructure REIT in 2024, backed by one of its main shopping centres on the mainland, raising a total of 3.3 billion yuan.
In the fifth year of a property downturn, Chinese developers have shifted from building new projects to focus on recurring rental income and property management fees, according to a report from Morgan Stanley published in November.
“In the short term, recurring income could cushion the earnings decline during a property down cycle, supporting developers that have large rental portfolios with a milder earnings drop,” the report said. “Developers are poised to benefit from this emerging long-term theme given their large rental portfolios, but still low participation in REIT issuance.”
Under continued pressure, Chinese developers were not able to solely rely on bank borrowing, according to Wu. “They need alternative financial channels,” he said. “They need to monetise their existing real estate portfolio in a more efficient manner.”
“This is why REITs are important because they could be an alternative solution,” he added. “[They are] expected to activate income generating assets held by developers and help them release the value of the properties.”
According to Morgan Stanley, the C-REITs market was expected to grow by 30 times to become a US$1 trillion industry over the next 20 years.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.
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