Guanghua Thought Leadership
Real estate financial innovation: REITs market construction and development

The launch of REITs in China, especially public REITs, has two important implications. First of all, REITs are an important grip for supply-side reform of financial services. The launch of REITs is an implementation of the policy "cutting overcapacity, de-stocking, de-leveraging, reducing costs and improving weak links". REITs will revitalize various types of operating real estate, reduce the financial leverage of the government and enterprises, and resolve the maturity mismatch and high leverage risks in the credit market. The construction of REITs market can provide a feasible financial strategy for PPP and infrastructure investment, and promote the industrial upgrade of the real estate industry and the transformation of the profit model.

Secondly, the development and construction of the REITs market is an important part of the supply-side reform of the financial system. REITs, as a long-term investment instrument with high proportional dividends and yield-to-risk ratio, are high-quality and mature financial products that can resolve the lack of direct financing in China's financial system and improve the risk diversification ability of the financial system. For global investors, Chinese REITs is important for further promoting globalization of China's financial system and attracting foreign capital to further vitalize China's economy.