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Securitising China real estate: a tale of two China‐centric REITs

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  • Michael C.H. Quek
  • Seow Eng Ong

Abstract

Purpose - There is currently no real estate investment trust (REIT) listed in China. As of date, only two REITs – GZI REIT of Hong Kong and CapitaRetail China Trust (CRCT) of Singapore – have securitised Chinese property assets. The purpose of this paper is to examine the driving forces and the obstacles surrounding China REITs, and evaluate REIT securitisation as an exit strategy for Chinese properties. Design/methodology/approach - The paper analyses the performance of the two cross‐border REITs and investigates whether REITs holding Chinese assets outperform other listed REITs. Research limitations/implications - CRCT outperforms GZI REIT as well as some of the other Singapore REITs, while GZI REIT ranked second lowest in terms of price performance when compared to other Hong Kong REITs. The limited history of CRCT suggests that when a well‐structured REIT holding Chinese assets can perform very well. We also infer that performance is closely linked to portfolio composition and diversification, growth story and originator reputation. Originality/value - The study shows that there is indeed a strong local demand for China REITs, and that REITs can provide an alternative source of real estate financing for Chinese developers and promote a better regulated Chinese real estate market.

Suggested Citation

  • Michael C.H. Quek & Seow Eng Ong, 2008. "Securitising China real estate: a tale of two China‐centric REITs," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 26(3), pages 247-274, April.
    • Handle: RePEc:eme:jpifpp:v:26:y:2008:i:3:p:247-274
    DOI: 10.1108/14635780810871623
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    Citations

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    Cited by:

    1. Hong Wang & Yining Sun & Yin Chen, 2009. "Special considerations for designing pilot REITs in China," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 27(2), pages 140-161, March.
    2. Liu Xiaoxin & Wu Di & Li Xiuting & Dong Jichang, 2013. "Financing of Low-Rent Housing REITs in China," Journal of Systems Science and Information, De Gruyter, vol. 1(1), pages 1-21, February.

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