The Research Of New Operation Mode For Indemnificatory Housing In China

With the booming of real estate market and the increasing house pricein China, the issue of housing has become the major issues of livelihoodand development in recent years. Therefore, the Chinese Governmentkept increasing regulation of the real estate market strictly these years. Onthe one hand, they tried to avoid the rapid rise on house price bypublishing property-purchasing limitations and rising mortgage interestrates. On the other hand, they speeded up on the construction ofindemnificatory housing, especially the construction of low-rent housingand public rental housing. However, the huge demand for funds hasbecome a major bottleneck restricting the scale and speed of theindemnificatory housing construction. The financial input of the centraland local government only is unable to meet the funds demand of theindemnificatory housing construction. In order to speed up the pace ofindemnificatory housing construction and increase the supply of housing,exploring new financing channels has to be the priority task in thedevelopment of the indemnificatory housing construction. In this paper, a new operation mode of the indemnificatory housing byusing the financing of Real Estate Investment Trusts (REITs) was studiedand discussed. The course of development and current status of theindemnificatory housing construction in China was introduced in the firstpart, along with concepts of REITs and several successful examples onREITs in the world. The second part focused on introducing an operationmode in a company named ProLogis, and then establishing a newoperation mode of the indemnificatory housing construction based on theProLogis mode. This new operation mode by using REITs financing wasfound to be feasible and promising after the feasibility analysis andSWOT analysis, especially in those economically developed cities, likeTianjin, Shanghai. Correspondingly, this mode in other area in China mayface the restriction of low yield. In the final part of this paper, problemsthat the development of the indemnificatory housing construction maylikely to face were analyzed and also some optimizing recommendationswere put forward.