The scale stood at the 100 billion level, and the Shanghai Stock Exchange accoun

On June 21st, China's public real estate investment trusts (REITs) celebrated their third anniversary since the market opening.

As of now, the overall scale of the infrastructure public REITs market has surpassed the 100 billion yuan threshold. Specifically, the Shanghai market has seen the issuance of 27 REITs, with an issuance scale nearing 90 billion yuan, accounting for about 70% of the entire market, forming a "primary issuance + expansion" dual-wheel pattern.

Looking at the secondary market, over the past three years, the secondary market for public REITs has gone through stages of blind pursuit, deep adjustment, and a return to rationality.

Looking ahead, the R&F Real Estate Research Institute stated that the coverage and popularity of REITs will significantly increase. The types of assets, enterprises, and capital served will evolve and expand continuously, bringing more private and foreign enterprises into the market and serving national strategies and new development patterns such as dual carbon, dual circulation, and the Belt and Road Initiative more deeply.

Initial Complete Cycle Experience

On June 21, 2021, the first batch of 9 infrastructure REITs pilot projects officially began trading on the Shanghai and Shenzhen stock exchanges. Over the past three years, the performance of China's REITs secondary market has reflected a deep reconstruction of pricing logic.

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Specifically, in 2021 and 2022, as the market was burgeoning, public REITs experienced an independent upward trend amidst the "asset famine" dilemma, becoming a sought-after investment for many funds. The market ecology of "blind new issuance" and "money abundant, goods scarce" quickly pushed up the premium of public REITs.

In 2023, a deep adjustment was encountered. That year, the stock-like nature and volatility of public REITs were not yet clearly understood. Some underlying asset operations experienced certain fluctuations, project trading activity decreased, market liquidity was weak, and coupled with institutional rebalancing actions, a negative feedback loop was triggered, leading to a significant discount in the REITs secondary market.

After the overshoot of REITs, the market rebounded in the first half of 2024, with the current market price rising by over 10% from the beginning of the year's low point. The market has become more focused on the operation of underlying assets, and investment has gradually returned to rationality.

"It can be said that over the past three years, the REITs market has initially experienced a complete cycle," said an institutional figure. During this period, the market has explored the investment attributes of public REITs, and their characteristics of being both stock and bond-like have been recognized. Investment behavior has also gradually become more rational; public REITs have high dividend payout ratios, relatively stable underlying asset performance, and low correlation with stocks and bonds. The average distribution rate for property rights projects is around 5%, and the average IRR for operating rights projects is around 7%. In addition, the investor base has been continuously enriched, REITs investment strategies have become more diversified, and asset management products based on REITs investment strategies have been continuously innovated.As a fund manager, Huaxia Fund stated that public REITs need to cultivate investors to assess the investment value of infrastructure REITs more objectively and rationally, becoming long-term value investors.

"In the future, with the entry of funds such as social security funds and pension FOFs into the market, it will continue to bring stable incremental capital to the market, which is also conducive to the improvement of liquidity," said the institution.

Asset categories continue to expand

So far, the overall scale of the infrastructure public REITs market has reached the level of tens of billions of yuan. While promoting the expansion of scale, the underlying assets of public REITs are becoming more diversified, and the system and policies are also being continuously improved.

In recent years, REITs with multiple issuers, multiple formats, cross-regional, and cross-industry categories have continued to be launched. For example: against the backdrop of the accelerated promotion of the construction of the national housing security system, the introduction of affordable rental housing REITs; the issuance and listing of clean energy infrastructure REITs such as photovoltaics and wind power; and the landing of the first batch of consumer infrastructure public REITs.

Some corporate insiders told reporters that on the basis of existing asset types, they have started to explore other asset types such as ports, scenic spots, and IDCs (Internet Data Centers), and are closely monitoring policy trends, and will timely layout new types of assets.

Since 2024, the Shanghai market has completed the issuance and listing of 5 initial projects, involving asset types such as affordable rental housing, consumer, clean energy, and highways. At the same time, projects such as Jingneng Photovoltaic, Guojun Dongjiu, Huaxia Beibao, and Huaxia Huaren Youchao have successively issued announcements for expansion and the purchase of new projects.

In the industry view, the "first issuance + expansion" dual-wheel drive pattern of the domestic REITs market has been formed, and the implementation of the expansion of existing public REITs will continue to enhance the growth space and business vitality of public REITs.

In the process of the continuous development of infrastructure public REITs, the system and supporting policies are also being continuously improved. According to the first financial reporter, the regulatory authorities have started from multiple aspects such as "REITs review", "information disclosure", "governance mechanism", "incentive and restraint", "secondary market monitoring", "investor relationship management", and "continuous expansion", and continue to improve the REITs rule system.

In addition, the regulatory authorities have issued and continuously updated project application guidelines and review focus issues, and have cooperated and promoted the landing of REIT-related tax policies, asset expansion rules, and accounting rules.

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