REIT Between the Lines
Remember when Chinese landlords were buried alive, and speculators were banished to pig farms in Ningxia? Neither does the State Council. Which is fortunate not just for the former two, but also debt-ridden local governments across the land.
Although Vanke's "Beta REIT" has been around since 2015, nine new REITs worth almost $5b will soon launch, underlying assets comprising industrial parks, highways, and the like. Not only that, for the first time, REITs will be open to retail investors. Keep in mind that State Counselor Xu Xianping deems 4% of the $20T invested in Chinese infrastructure REIT worthy, some $800b, which would come to over half of the U.S.' REIT market.
"It's a win-win, in terms of local governments having a new financial channels, and retail investors having an inflation-friendly product," says Edward Lehman. "We can reasonably expect more traditional property projects to underly REIT funds eventually, which will entail a massive boom in the industry."