Practice briefing – China's commercial real estate recovery, REITs and tax policies

Abstract

PurposeCommercial property market allows for the potential development of a similar real estate investment trust (REIT) structure in China as the commercial REITs (C-REIT) such as those offshore in Hong Kong and Singapore.Design/methodology/approachThe authors examine tax codes of the present real estate investment methods in China in order to understand the interest for a new vehicle that specifically focuses on commercial real estate.FindingsGiven the progress of offshore C-REITS and Chinese government's emphasis on real estate, Chinese shareholders will benefit if onshore C-REITS are issued. Crucial to the success of C-REITS will be how the C-REIT shares will be priced with respect to Net Asset Value of underlying assets.Research limitations/implicationsCOVID-19 pandemic has changed government priorities, and development of C-REITS in real estate for growth may no longer be a priority policy for China.Practical implicationsLiquidity in real estate markets will be enhanced by C-REITS due to participation of private investors.Social implicationsOnshore C-REITS would allow small and individual investors to have a stake in their home country's commercial real estate as an investment security for their own future.Originality/valueThis policy article also includes an interview with real estate professional in China whose opinions are embedded and added to the article.