Are REITs Coming to China?

Sullivan writes that creating a REIT structure in China could lower the cost of capital for real estate companies in the market .

NEWPORT BEACH, CA—Jim Sullivan, President of Green Street’s Advisory Group, recently traveled to China for two REIT-related conferences. China does not yet have a REIT structure. Consequently, the key mission of the conferences was to educate the market on the pros and cons of the structure and to outline “best practices” in markets where REITs have been successful. This article highlights his key takeaways.

Two REIT conferences recently took place in Beijing, China. Both were designed to educate market participants about the REIT structure and the “best practices” that have contributed to the rapid expansion of the REIT market in the US and several other countries around the world. China is the second largest economy in the world, and its commercial real estate market is expanding rapidly. However, China currently does not have a REIT regime. The creation of a REIT structure in China could lower the cost of capital for real estate companies in the market while also providing an efficient and liquid investment vehicle for institutional and retail investors.