The Initial Model Of The Chinese Real Estate Investment Fund Choices

Real estate investment needs huge amount of money and long-term circulation,so that the developers could hardly meet the great demands of bankrolls. On theground of incomplete real estate financial market and capital market in China, themoney for property developments mainly comes from bank credits, leaving all therisks to banking system. While huge amount of bank credits inflow into real estatemarket, property crisis in case will be conducted to the whole financial systemthrough banking system. In order to keep away the financial risks, the central bankhas carried out a series of policies to contract bank credits to real estate industry.However, the aim of PBC is not to limit the real estate industry, which is a mainstay,but to lead it to properly develop, i.e, transmitted from the indirect financial system tothe direct one.Multi-source financing must become the tendency. For the moment, it isimperative for China to establish a real estate financing pattern in comply with theindustry development, which has both the functions of induction and risk aversion. Onthis background, we must attach enough attention to the innovation and developmentof real estate financial instruments. After making reference to the experience of othercountries and territories, we can safely come to the conclusion that, been developedproperly, REITs should be an effective choice for Chinese real estate financing systemrevolution.However, we should realize that, compared with developed countries, Chinahas lagged behind them in the development of real estate industry, trust industry andindustrial investment fund industry, and the related researches fall behindcorrespondingly. On the whole, the existing discussions are still so general that theyseldom touch upon the problem coming with the patterns they choose.As widely recognized, American REITs is big and nice representative. Theauthor reviews the historical development of REITs in America briefly, and sets forththeir categories and various structures, as well as the reasons of REITs' success andtheir advantages according to the above. Though it is necessary to use others'experience for reference, but it doesn't mean we should take everything for use.Well-established environment is crucial to the development of REITs. At this moment,it is difficult, even impossible, to develop various types of REITs like America.The target of the paper is to design a healthy developing pattern for REITs atthe beginning stage in China, in order to improve Chinese real estate financial systemand make unprofessional investment behaviors professional, as well as enhance themarket's abilities to deal with risks.