The European Public Real Estate Association (EPRA) has agreed to share knowledge with China’s REITs alliance as it looks to introduce the tax-efficient vehicle.
The listed real estate industry body, along with NAREIT and the Asian Public Real Estate Association (APREA), has committed to a strategic partnership to support C-REITs through regular information exchange.
The China Real Estate Chamber of Commerce (CRECC) and the Tsinghua Alumni Association of Real Estate agreed the partnership last week.
As reported last month, the move by Beijing to approve REITs comes nearly 10 years after a pilot programme for REITs was first discussed.
It has taken the Chinese government some time to give a green light to the product, which has gained much traction in Asian countries such as Japan, Singapore, Hong Kong and Malaysia over the past decade.
Authorities approved a proposal by China’s largest brokerage house, Citic Securities, to float a REIT backed by two office buildings worth a combined ¥5bn (€36m) in Beijing and Shenzhen.
Citic Securities reportedly owns both buildings.
Peter Verwer, recently appointed chief executive of the Asia Pacific Real Estate Association (APREA), told IP Real Estate China’s first listed REIT would bring “many positive benefits” to the country’s property market.
UBS Global Asset last year launched a fund to invest in Shanghai’s public rental homes, the first investment product of its kind in China.
It will convert into a publicly listed REIT when the regulator allows it, according to media reports.
Philip Charls, chief executive at EPRA, said the Brussels-based body would “fully support” efforts to introduce C-REITs.
“Not only will this boost the growth of the listed sector in one of the world’s largest real estate markets, it will also raise understanding of the great advantages REIT structures have for Chinese investors seeking property assets in Europe, the Americas and the rest of Asia,” Charls said.
Analysts estimate a Chinese REIT market has the potential to grow by as much as a factor of 10 over the next decade, EPRA said, from the listed real estate sector’s current market capitalisation of about $500bn (€402bn).
Fred Wang, secretary general of C-REITs, said underlying legal and tax structures were still to be drafted.
Wang said it was crucial to unite Chinese developers, financial institutions and intermediaries behind the promotion of REITs to government authorities.
