Chinese REITs you should look into

REITs within China: Opportunities and Challenges

The research aims to compare the actual REITS in HK, China and Singapore in terms of legislation, taxation, costs and returns.

As an important tool for facilitating property liquidity, the opportunity for the development of Real Estate Investment Trusts (REITs) in China is here.
Within two years, several quasi-REIT products were listed. This unprecedented speed of progress appears to be a sign that the Chinese government is committed to an accelerated development from the onshore REIT market. In this context, INSITE Group Research Centre and RICS conducted a questionnaire survey in the center of 2015 and published the research report REITs in China: Possibilities and Challenges.
The survey results indicate that although the potential customers of REITs in China are bright, there are limitations within their development, including government policy, finance system, talent, etc. The most of respondents considered market maturity as the foundation for REITs.
Also currently in the Chinese housing market, there are few properties that are suitable for development associated with REITs. It is concluded in the research report that the launch of standard REITs will facilitate the healthy development from the real estate sector in China and the entire monetary and economic climate.
What is urgently needed is the removal of obstacles in launching the conventional of REITs in China and the government can support this particular by issuing specific legislation for REITs products in China.

The reason why China Is Buying Into U. S. REITs

When on a consulting assignment a couple of years ago in Miami, I saw firsthand how Brazilians and Argentinians fleeing eminent currency devaluations within their countries bought condos and commercial buildings in Miami at the dizzying pace to preserve capital. Their efforts changed the skyline of this city, and have kept Miami’s economy humming.

And now Chinese language investors’ growing appetite for U. S. real estate is more confirmation of the way the asset is a major opportunity for wealth preservation and income-and why if you’re not already purchasing our Global Income Edge REIT portfolio, you should consider this. We’ll be review our holdings in depth in the following issue of GIE, due to be released Dec. 14.

Chinese language buyers spent $28. 6 billion on American homes in the entire year ended in March, more than double their purchases two many years before, according to the National Association of Realtors. And Chinese purchases in overseas commercial property jumped 49% last year, according to real estate brokerage Jones Lang LaSalle.

Ough. S. real estate seems to be sopping up more compared to its share of money from China, much of which is trying to find a new home since the collapse of the Chinese share markets. Reportedly more than $590 billion has moved out associated with China since last summer.

Though Chinese buyers are responsible for any small part of overall sales, we believe this shows a significant global push into the U. S. real estate market which will only grow stronger.

U. S. investors should take notice before earnings opportunity in their backyard passes them by. Global investors’ trip to safety has caused the dollar to strengthen, yields on government securities all over the world to collapse, and inevitably U. S. real estate valuations is going to be pushed up.

Time to Buy

REITs have many factors opting for them. To start, they’ve been extremely oversold in the last couple weeks and months on Fed rate fears, even as many of those REIT firms have continued to post good earnings.

Real property investment manager Cohen & Steers said recently that U. Utes. REIT valuations are at attractive levels, and specifically “REIT prices are near the center of the four-year range relative to cash flows. ” Cohen & Steers also noted how the stock market, by comparison, is at high levels. The investment managers conclude once we do: “We believe this represents a compelling opportunity for REIT investors”.

And given many REITs now trade in a discount to their net asset value (NAV), many might be taken private by private equity firms. But in the coming months there might be stepped up competition for these investments beyond private equity companies and Chinese buyers.

We have long thought that REITs would be the beneficiaries associated with investors fleeing high yield bond markets that are collapsing due to defaults due to the collapse in commodity markets.

Another reason that REITs would be compelling as a supply of wealth preservation is that they typically trade independently from stock markets that may be affected by the impending rate increases. And big investment banks for example Goldman Sachs are already advising equity investors to moderate their expectations for stocks within the coming years.

Finally, the expected increase in European stimulus can also be a positive for REITs. That stimulus will further depress yields within the European region and spur demand for income investments such as REITs within the U. S. and elsewhere.