| In recent years, introducing Real Estate Investment Trusts (REITs) into China market has been a hot issue among industrial professionals and academican. Given the background of American subprime mortgage crisis, this dissertation focuses on the dual characteristics of REIT as a securitized real estate and provides a theoretical basis for the launch of REITs in China after summing up the lessons of subprime crisis regarding product innovation. At the same time, this dissertation also sorts out the development process of China's real estate market, sums up the main issues of the real estate market, and provides a practical basis for the introduction of REITs into China through a questionnaire survey on the willingness of Chinese investors to invest in REITs and factors that influence their investment decisions. Finally, based on the theoretical basis and practical basis for China's launch of REITs, this dissertation designs a development model of REITs in exchange markets that is in line with domestic conditions. This study mainly deals with the lessons of U.S. subprime crisis, the dual characteristics of REITs, the demand of REITs in China, and the product development model of REITs in exchange markets. The main thesis and conclusions are as follows:First of all, this dissertation conducts an in-depth analysis of the causes and lessons of U.S. subprime mortgage crisis. As found by this research, differences in national savings rates have led to a serious imbalance in the international trading system; deficiencies in the international monetary system have led to difficulties in promptly correcting imbalances in international trade; and the current international monetary system has failed to bind monetary policies in developed countries. Given such an international context, low interest rates promoted a long-term bull market in the U.S. real estate market; rising real estate prices and financial innovation promoted the rapid expansion of subprime mortgages; and a large asset securitization market further expanded the risk of subprime mortgages. As a result, subprime mortgage crisis broke out. The burst of real estate bubble became the fuse of the subprime crisis; the multi-level subprime mortgage product innovation became the transmission chain of the financial crisis; and the laissez-faire regulatory philosophy became the catalyst of the subprime crisis outbreak. A lesson learned from the U.S. subprime crisis is that exchange markets are the basis of derivatives markets and a key to financial risk management and control; they play an irreplaceable role in financial innovations. Modern supervision of the financial system should strengthen the supervision of its functionality and ex ante regulation.Secondly, this dissertation discusses the dual characteristics of REITs from model derivation and empirical examination. The model derived results show that the prices of REITs are not only affected by their intrinsic value, that is, the specific conditions of the real estate market, but also affected by the conditions of stock markets. Therefore, when REITs are freely traded in a stock market, the prices of REITs are positively related to not only real estate prices, but also stock market prices, indicating that the pricing behavior of REITs has dual characteristics of both real estate and stock. At the same time, through an empirical analysis by using relevant information from the U.S., Japan, and Singapore, the empirical results show that REITs and the stock market have significant two-way Granger causation. In addition, regardless in the short term or long term, REITs and the real estate market also have significant two-way Granger causation. Therefore, after consolidating the relationship of REITs with the securities market and the real estate market, it can be found that REITs have dual characteristics of both securities and real estate assets.Furthermore, this dissertation also uses a survey to study the willingness of potential domestic investors in China to invest in REITs and key factors of their consideration. Empirical results show that, for general investors, their willingness to purchase beneficiary securities is significantly influenced by factors such as the real estate market, liquidity, small investments, premium, security, rates of return, scale, market risk of the subject matter i.e. rent, age, and experience. In particular, regarding the overall factors, if the investors are more optimistic about the real estate market, the probability for them to purchase REITs is greater. Regarding securitization factors, if the investors pay greater attention to small investments of REITs and if there are more preferential options, more adequate security, and a higher rate of return, then the probability of their choice to buy REITs is relatively higher. Regarding the nature of subject matter, if the investors are more concerned about the nature of REITs and if the subject matter of beneficiary securities i.e. rent has less market risk, the probability of investors'choice to buy REITs is higher. Regarding the nature of investors, if the investors are younger, the probability of their choice to buy REITs is higher. In addition, if the investors have more experiences in real estate and finance, their willingness to purchase is also greater. Overall, China has had a realistic basis for the launch of REITs.Finally, based on the lessons of U.S. subprime crisis and the actual situation of the domestic market in China, this dissertation proposes the introduction of REITs in exchange markets. This will not only benefit small and medium investors and allow them to share the results of China's rapid economic growth, optimize the product structure of capital markets, distribute social and financial risks, optimize the asset allocation of institutional investors, but also enhance the management of real estate assets. Starting from China's current market conditions and demand for risk control, it is more appropriate to have REITs publicly offered in the securities exchange as contract-based, closed-end funds, using high-quality commercial and industrial real estate as the underlying assets and adopting a professional business model of asset-separation . During the terms of REITs, investors can only transfer the amount of funds they hold and can not redeem the REITs. However, in order to promptly attract high-quality property and to comply with international practice, REITs shall be given more flexibility in the choice of timing and scale for additional issuance according to market conditions after being established for a certain period of time; in other words, REITs should adopt a semi-closed mode of operation.Summing up the research object, content, and methodology of this dissertation, the innovative value of this dissertation may include the following:First of all, this is the first domestic research on the problems of the dual characteristics of REITs (innovation of research object). This is the first time for a study to discuss the dual characteristics of REITs from both theoretical and empirical evidence, use data of mature outside markets and emerging markets to conduct an empirical analysis, and prove the close intrinsic link among REITs, the real estate market, and the stock market.Secondly, this is the first time for a study to use a questionnaire survey to discuss the feasibility of introducing REITs (innovation of research methodology). The author is the first one to distribute survey questionnaires to potential investors of REITs and to analyze the feasibility of introducing REITs into China and related factors by using the data obtained from the survey.Thirdly, this is the first time for a study to research the development model of REITs (innovation of research content) by using the theoretical and practical basis of REITs. This dissertation is the first one to design a development model for REITs in exchange markets based on lessons learned from the U.S. subprime crisis, the dual characteristics of REITs, and the feasibility of introducing REITs into China.
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