China News Service, Hong Kong, June 17th. Title: Hong Kong Financial Development Council: Promoting the Diversified Development of Hong Kong Real Estate Fund
China News Agency reporter Shi Bingyun
The Chief Executive Officer of the Hong Kong Financial Development Council (FBA) Au Jinglin and Director of Policy Research and Director Dong Yiyue said in an exclusive interview with a reporter from China News Agency that in recent years, with the promotion of the SAR government’s policies and the acceleration of new infrastructure in the region, Hong Kong can play its unique advantages Grasping growth opportunities, the market size of real estate investment trusts (REITs) has the opportunity to surpass Singapore and Japan.
In May, the Hong Kong Financial Affairs Bureau issued a research report on "Revitalizing the Hong Kong Real Estate Investment Trust Fund Market-Improving Liquidity".
The report pointed out that Hong Kong began to develop the property trust market in 2003, but so far there are only 13 REITs in Hong Kong (two of which are suspended). Among them, Link Realty, which was listed in 2005, is still the largest REIT in Asia.
However, the REITs in other markets in the region, including Japan, Singapore, and Australia, have a more substantial market scale and diverse types.
Dong Yiyue said that in the past, the development of the Hong Kong REITs market was relatively slow, because although there were many large real estate developers in Hong Kong and the Mainland, most of them chose the form of listed companies in the past.
Hong Kong REITs also focus more on retail stores, shopping malls, and real estate. Investors have insufficient awareness of this type of real estate fund.
From the perspective of investors, Dong Yiyue pointed out that the advantage of REITs investment is that they can get stable interest returns.
From the company's point of view, large-scale fund-raising and asset-light operations can be achieved.
As an example, the SF Realty Trust, which was listed just now in the previous month, is the logistics industry's REITs that transfer the assets and liabilities of offline stores to reduce the pressure on the main profitable logistics business.
Dong Yiyue believes that the listing of SF Realty Trust will bring about "network effects." Other logistics companies will also refer to SF's performance and valuation levels to attract similar REITs to go public.
Similarly, the emerging types of housing trusts include databases, new infrastructure, medical and healthcare testing, etc. As more and more of these industries in the society require upgrading and construction, the REITs market is developing in a diversified manner.
According to data from the FSDC, as of the end of last year, Hong Kong's real estate funds accounted for about 2% of the world's total, Singapore accounted for about 3%, and Japan accounted for 5%.
In an interview, Ou Jinglin pointed out that Hong Kong REITs have a great opportunity to catch up with the scale of Japan and Singapore.
He explained that, first, Hong Kong can provide a global fund pool. The Hong Kong stock market has high liquidity, which is more active than Japan and Singapore, which is conducive to the liquidity of the REITs market.
Second, Hong Kong can raise funds for the mainland market, which is a very broad market.
For example, the infrastructure projects of the "Belt and Road", these companies hope to use capital investment more effectively, use REITs to recover the capital after listing, and then quickly invest in new projects.
Third, the scope of Hong Kong's REITs development is very large. In addition to commercial buildings and residential buildings, there are also different forms of assets such as infrastructure, medical care, and data centers.
Another opportunity for development is the national goal of "carbon peak by 2030" and "carbon neutrality by 2060", which will require a lot of funds to update traditional infrastructure and energy equipment. It is impossible for all of these funds to be provided by the state. REITs are convenient. It will become an important fund-raising tool for infrastructure renewal projects.
In the report, the FSDC also recommended that REITs be included in "interconnection".
Ou Jinglin's analogy to Hong Kong's active stock market is precisely because the stock exchanges between Hong Kong and the Mainland have greatly increased the trading volume and circulation.
Especially now in the development of infrastructure public offering REITs in the Mainland, the interoperability between the two places is not competition, but mutual assistance.
Hong Kong has long been an investment gateway for China Unicom. If the REITs of the two places are connected, overseas investors who intend to participate in infrastructure construction in the Mainland can inject capital through Hong Kong. Mainland investors can also diversify their deployment in the global market to support regional economic growth and structural restructuring. It also helps Hong Kong develop into a hub for investment by real estate funds in the region.
Dong Yiyue pointed out that in order to promote the development of real estate funds, the Hong Kong MPFA and the Securities Regulatory Commission have successively introduced favorable policies in the past two years, such as expanding the proportion of REITs that can be invested in MPF and the number of markets, and increasing the leverage ratio of real estate funds.
This year, the Financial Secretary of the Hong Kong Special Administrative Region Government, Chen Maobo, also mentioned in the "Budget" that in order to strengthen Hong Kong's function as the primary fund-raising center for REITs, in the next three years, 70% of the local professional service fees will be provided to qualified housing trust funds. The subsidy is capped at 8 million Hong Kong dollars.
Dong Yiyue said, "This funding will be an important consideration for attracting REITs at home and abroad to go public." (End)