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On February 4th, the Shanghai Stock Exchange announced that it has received applications for eight commercial real estate investment trusts (REITs) since Chinese regulators launched a new pilot program for commercial REITs one month ago. These REITs are backed by diverse commercial properties, including hotels, office buildings with accompanying retail facilities, outlet malls, and shopping centers.
The original owners of these properties are prominent developers such as Poly Developments and Holdings Group, Shanghai Land Group, Lujiazui Properties, and CapitaLand Investment. Each of the eight REITs aims to raise between CNY 1.7 billion and CNY 7.5 billion (roughly USD 245 million to USD 1.1 billion), with total planned funding reaching approximately CNY 31.5 billion (around USD 4.5 billion), according to estimates from Bank of China International.
Commercial REITs are closed-end, publicly traded investment funds that generate steady cash flows by holding income-producing commercial real estate and distributing returns to their investors. This pilot program is notable for allowing the issuance of REITs with hotels and office buildings as the underlying assets for the first time.
Of the eight applications submitted, five include assets such as office buildings, hotels, and mixed-use complexes—assets types that were newly permitted under the pilot. This development signals a new era in China, where the full spectrum of commercial real estate can now be publicly invested in through REITs, according to Xie Chen, head of research at Coldwell Banker Richard Ellis Group China.
One of the newly approved REIT projects is Huaxia Yintai, which is based on the Hefei Yintai Center, a luxury shopping mall featuring numerous high-end retail stores. An industry insider noted it was previously challenging to include such assets in REIT products. The expansion of eligible underlying assets means more commercial properties, like shopping centers, office buildings, and hotels, can now be revitalized via public listings, providing broader exit channels for commercial real estate investments.
Market experts believe that commercial REITs will improve the valuation of high-quality properties through rent capitalization, emphasizing operational performance as key to competitiveness. This shift is seen as a catalyst for transforming China’s commercial real estate industry and promoting a broader move from property development and sales toward asset management.
Additionally, public REITs can assist developers in transitioning from traditional development roles to operational management, enabling a shift toward lighter, more flexible asset structures, as highlighted by a recent research report from China Real Estate Information Corporation.
Since 2023, the inclusion of consumption infrastructure assets—such as shopping centers and supermarkets—in the REIT pilot program has marked a significant expansion. The first projects involved properties owned by China Jinmao in Changsha and Wumart Group supermarkets in Beijing. Since then, the scope of underlying assets has widened significantly, encompassing a variety of retail formats like shopping malls, department stores, outlet outlets, supermarkets, and open-air markets.
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