China Likely to Launch REIT Trials in Fourth Quarter

飞雪寒冰

China is likely to launch a pilot program for real estate investment trusts in Shanghai, Beijing and Tianjing in the fourth quarter of 2009, a person close to China's central bank told Caijing.

The People Bank of China has set up a panel to study REITS, and a proposal is expected to go to the State Council, China's cabinet, for approval in September, according to the person.

REITs are corporations enjoying tax concessions to invest in real estate. They are structured to distribute much of the income derived from holding the property to investors, who hold REIT securities similar to mutual fund shares.

飞雪寒冰

Chinese developers have been eagerly awaiting a REIT pilot program after being hit hard by the 2008 slump and pressured by the frozen IPO market, although the need to translate their holdings into cash is not as urgent as it once was.  

Beijing's loose monetary policy since late 2008 - as well as the revitalized domestic stock market, which has provided an extra supply of capital - has somewhat eased the funding pressures on developers.  

Nationwide property sales grew 53 percent year-on-year to 1.58 trillion yuan in the first half as Chinese banks unleashed a surge of liquidity. Banks lent 7.4 trillion yuan in the first half, more than three times the level a year earlier.