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China’s First Steps Toward a $3 Trillion REIT Market

Article-China’s First Steps Toward a $3 Trillion REIT Market

For the longest time, the only way to get exposure to China’s real estate market was to buy a house. That’s all set to change with the advent of real estate investment trusts.

China started a REIT trial in late April that will initially focus on accumulating funds kickstart infrastructure projects. This is great news for retail investors who have been eager to invest in China. “If successful, the program may be expanded to include traditional real estate, exposing individual investors to a market Goldman Sachs Group Inc. estimates could one day be worth as much as $3 trillion.” The initial program includes a set of rules to aid in ensuring forethought. “When the government feels confident enough REITs won’t flare up the property market, they may expand the trial.”

For retail investors, it would be a whole new world. A lack of investment options has meant Chinese families have around 78% of their wealth tied up in property, more than double the U.S., a 2019 study by Chengdu’s Southwestern University of Finance and Economics showed. Less than 1% is invested in stocks.

Read more about the program and its structure in this article from Bloomberg.

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