Hong Kong hopes inclusion of Reits in the Stock Connect scheme could help close gap with Singapore
- Japan, Singapore and Hong Kong are Asia’s three biggest Reit markets with mainland China in fourth place
- Chinese investors can now get international property exposure via Hong Kong Reits as China Reits are prohibited from holding Hong Kong or overseas properties
The inclusion of real estate investment trusts (Reits) in the China-Hong Kong Stock Connect mechanism will expand the investor base, increase the trading liquidity and attract more listings of these collective investment schemes to Hong Kong, analysts said.
The initiative, unveiled last month, aims at further expanding the mutual market access between mainland China and Hong Kong, and will also make it a more competitive market compared with rival Singapore.
“This initiative will attract sponsors from around the world to list their Reits in Hong Kong, as they can target a larger pool of investors,” said Jeremy Ong, partner and head of Baker McKenzie’s Hong Kong Reits practice. “This is important to Hong Kong as the city currently has a limited number of international Reits.”
“This in turn may result in a better performing H-Reit sector, which can then attract international Reits to list here, where they may previously have opted for Singapore and create a virtuous cycle,” said Ong.
As of January 2024, there were 41 Reits trading in Singapore, worth a combined S$100 billion (US$74 billion), making it the largest Reit market in Asia outside Japan. There are 17 S-Reits whose real estate portfolios comprise entirely of overseas properties as of January 2024, according to the Reit Association of Singapore.
