Hong Kong’s new Reits association to lure foreign investment, attract new listings

AT first glance, Hong Kong - a city best known for its concrete canyons and modernist skyscrapers - would seem to be an ideal home for a real estate investment trust (REIT), which bundles properties together as an investment fund, sold through a public listing. 

But sky-high property prices have stymied this approach, as property owners and public investors can readily find better returns without going through an investment trust. This is about to change soon. Three of the industry’s top executives formed a new association recently, called the Hong Kong REITS Association. The trio comprises of George Hongchoy, the CEO of Link REIT, the city’s and Asia’s largest REIT by market capitalisation; Lin Deliang, CEO of Yuexiu REIT, the first Hong Kong-listed REIT from mainland China; and Hubert Chak, CEO of SF REIT, the city’s newest REIT with logistic properties, backed by China’s leading express delivery company, S F Holding. They came up with this idea last year, and their companies are the new associations’ only members for now. Hongchoy, the association’s chairman, said HSBC Trustee might soon join, as well as other industry players.

They vowed to work closely with regulators in Hong Kong and on the mainland, as well as industry participants, to enhance the global role of the sector and lure international investors to Hong Kong. They will also work to attract new listings from the mainland and elsewhere. A key impetus to this concerted push will be cross-border capital flows and listings from the mainland, despite a financial crisis currently unfolding in China’s residential property market that has rattled investors at home and abroad, according to analysts. DBS analyst Jeff Yau said that Hong Kong’s REIT market will continue to grow, but it would be better to attract more issuers and expand the investors’ pool by linking up with the Stock Connect Scheme with the mainland. Still, “it is moving in the right direction”, he added. To illustrate the potential opportunities, Lin of Yuexiu REIT, a state-owned company, pointed to the launch of the first batch of C-REITs (REITs listed on mainland exchanges) last year.