The Development Of China Real Estate Investment Trust

This paper focuses on the study of Real-estate Investment Trusts (REITS) by understanding its relevance and analyzing its exclusive advantages superior to other trust products. We conclude that REITs will be more and more utilized in financing the global real-estate market since it owns properties of professional management, portfolio investment, risk diversification, high liquidity and variety.With the development of the real-estate industry in China, massive attentions are drawn on the problem of financing the real-estate. It is concerned that the financial market is not mature in terms of financing real-estate industry since the major source to finance the real-estate is from the bank loan which hardly sustains the real-estate industry in the long run and further increases the difficulty to answer the tough question of risk control for commercial banks. The real world shows that real-estate bubbles more likely exist in a real-estate market which is highly dominated by the banking credit, which in turn strongly affects the development of the real economy. Withstanding this, however, the problem of excessive banking credits in financing the real-estate industry is still severe in our country, though many reforms have been implemented.Recently, the success of REITs in the global financial market shines a light on the topic of financing the real-estate industry in China. Undoubtedly, REITs will facilitate the development of the real-estate industry in our country due to its exclusive properties. However, we are concerned that there are many obstacles in implementing the real-estate investment trust in our country. To overcome these obstacles, we argue that the REITs can be promoted to our real-estate market by improving the market in seven points: enhancing the policy support (e.g. the tax reduction), establishing relative laws as well as the efficient inspection system; studying on the experiences of the stock and trust market; setting up a training mechanism; in addition, at the first stage of development, profiting the investors of REITs is considered to be the Equity REIT, which will be in favor of establishing a healthy and stable foundation of real-estate investment trust and facilitating the development of the real-estate industry in China.