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

Abstract

Purpose

Commercial 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/approach

The 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.

Findings

Given 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/implications

COVID-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 implications

Liquidity in real estate markets will be enhanced by C-REITS due to participation of private investors.

Social implications

Onshore 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/value

This policy article also includes an interview with real estate professional in China whose opinions are embedded and added to the article.

Citation

Muszynski, O. and Cinar, M.E. (2022), "Practice Briefing China's commercial real estate recovery, REITs and tax policies", Journal of Property Investment & Finance, Vol. 40 No. 2, pp. 263-274. https://doi.org/10.1108/JPIF-03-2021-0024