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Plan for REITs a step for firms to expand funding
By Cao Qian |
January 7, 2009, Wednesday
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Print Edition
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CHINA'S central bank is set to submit a proposal to the government for a trial operation of real estate investment trusts, or REITs, to help the country's real estate developers expand funding channels.
"The proposal for REITs has been formulated and will be submitted to the State Council for approval,'' Huo Liyin, deputy director for financial markets at the People's Bank of China, told a televised press conference in Beijing yesterday. "Trial operations will be conducted after approval is granted.''
Real estate developers in China, the majority of which rely on commercial banks for their primary source of funds, have long been facing funding shortages.
Many of them, especially small-sized firms, have been forced to postpone or freeze their projects indefinitely as they lack funding, industry people said.
Huo didn't give a timetable for the launch of REITs, but said the central bank will focus on risk control.
"The introduction of REITs is one of the few initiatives that the central government may likely tap in 2009 to help boost the domestic real estate market,'' said Albert Lau, managing director of Savills Property Services (Shanghai) Co Ltd.
Property sales across the country fell in 2008 as a result of an industry-wide correction, a slowdown in the country's economy as well as a global financial turmoil.
New property sales are expected to hit 600 million square meters in 2008, of which 500 million square meters are residential development (excluding those designated for relocation uses), Qi Ji, vice minister of housing and urban-rural development, told the same press conference yesterday.
That compared to 761.93 million square meters of new properties for 2007, of which 691.04 million square meters are houses (excluding those built for relocated residents), according to the National Statistics Bureau.
Qi said plans to boost the supply of budget and low-rent houses for needy families will have a positive impact on the domestic housing market.
"The proposal for REITs has been formulated and will be submitted to the State Council for approval,'' Huo Liyin, deputy director for financial markets at the People's Bank of China, told a televised press conference in Beijing yesterday. "Trial operations will be conducted after approval is granted.''
Real estate developers in China, the majority of which rely on commercial banks for their primary source of funds, have long been facing funding shortages.
Many of them, especially small-sized firms, have been forced to postpone or freeze their projects indefinitely as they lack funding, industry people said.
Huo didn't give a timetable for the launch of REITs, but said the central bank will focus on risk control.
"The introduction of REITs is one of the few initiatives that the central government may likely tap in 2009 to help boost the domestic real estate market,'' said Albert Lau, managing director of Savills Property Services (Shanghai) Co Ltd.
Property sales across the country fell in 2008 as a result of an industry-wide correction, a slowdown in the country's economy as well as a global financial turmoil.
New property sales are expected to hit 600 million square meters in 2008, of which 500 million square meters are residential development (excluding those designated for relocation uses), Qi Ji, vice minister of housing and urban-rural development, told the same press conference yesterday.
That compared to 761.93 million square meters of new properties for 2007, of which 691.04 million square meters are houses (excluding those built for relocated residents), according to the National Statistics Bureau.
Qi said plans to boost the supply of budget and low-rent houses for needy families will have a positive impact on the domestic housing market.
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