Malaysia Property News is a free resource website sharing Daily Property News & information about Property in Malaysia, which related to, Property Market, Property Investment, Commercial Property , Hot Properties Malaysia, Real Estate, Retail Shop, Business Park, Condominium Malaysia, Terraces & Apartment Malaysia, Houses, Residence, Resort and many more.

Thursday, September 4, 2008

China may set up real estate investment trusts

BEIJING: China may introduce property trusts this year, giving developers a much needed new source of funding, according to a top industry association official who believes Beijing is easing its tough stance as the property market cools.

The move could come as part of a government change of tack to ease tight monetary policies, many of which have been aimed at the property industry, according to Nie Meisheng, president of the China Real Estate Chamber of Commerce.

Beijing intensified a campaign late last year to clamp down on bank loans to the property sector, asking for higher down payments from homebuyers, as part of a wider effort to curb inflation and rein in runaway growth.

The steps hit home sales - down 50 per cent in Beijing, Shanghai and Shenzhen in July from a year earlier - and prices in some areas of Guangdong province have fallen 25 per cent.

Nie said the measures were aimed at cutting the industry's dependence on bank loans, which account for half of developers' funding, but added that Beijing was keen to ensure the property market did not collapse and hurt the broader economy.

"When one door closes, others will open," she said.

China has given the green light to big developers, such as China Vanke, Poly Real Estate and China Merchant to issue corporate bonds or new shares to replace loans coming due and to fund further expansion this year.

Setting up real estate investment trusts (REITs) - securities that pay rent from their property as dividends - will provide developers with a new avenue for funding, allowing them to effectively sell finished commercial buildings to investors.

"There will be some breakthrough by the end of this year," Nie said, referring to the introduction of REITs in China.

She said China's central bank was soliciting opinions from different government departments but declined to give a timeframe for any launch of REITs, or give any other details.

Many analysts believe property trusts will catch on in China because insurers are keen for stable investments to match their long-term liabilities, especially at a time when their stock investments have been hit hard by rocky markets.

By Reuters

No comments: