Infrastructure REIT Trials Hailed as Milestone Reform of Chinese Property Finance

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Chinese authorities have just unveiled a trial policy for publicly offered infrastructure real estate investment trusts (REIT’s) that observers say marks an “historic advance” for China’s real estate and finance industries.

On 30 April the China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission (NDRC) jointly issued the “Notice Concerning Concerning Work in Relation to Advancing Infrastructure Real Estate Investment Trust Trials” (关于推进基础设施领域不动产投资信托基金(REITs)试点相关工作的通知).

According to the Notice CSRC and NDRC will “fully make use of capital markets to actively support the undertaking of REIT trials for high-quality infrastructure in key areas and industries in accordance with the principles of the market and rule of law.”

The Notice outlines basic principles for infrastructure REIT trials, trial project requirements and trial work arrangements.

Following the issuance of the Notice CSRC and NDRC will coordinate with relevant departments to confirm work standards and procedures, as well as compile a list of infrastructure REIT trial projects.

Zhang Zheng (张峥), professor at the Peking University Guanghua School of Management, said that the launch of infrastructure REIT trials is a milestone event for China’s REIT sector.

“Publicly offered REIT trials have major significance for the reform of China’s real estate investment and finance system,” said Zheng in an essay published by Yicai.

“Its importance rivals the significance of reforms to the registration system for the A-share market.”

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