Talks about starting a Reits market in China have been ongoing since 2008 but never came to fruition on concerns they may further fuel home prices, which have risen exponentially over the last 20 years.
To prevent against funds being misused, Reits can only obtain leverage of up to 20 per cent and any money borrowed has to be used for maintenance and renovation rather than acquisitions. Until then, infrastructure-only Reits make sense for another reason - they'll help get China's battered economy back on its feet.
"Ramping up infrastructure investments through Reits can propel economic growth and curb the debt risks faced by local governments," said Zuo Fei, a managing director in the investment banking division of China Merchants Securities Co.