The first nine China REITs (C-REITs) comprising all infrastructure assets were issued in the first half of this year. According to UBS, China has US$60 trillion of infrastructure assets. “If 2% of these are securitised via REITs, using our proprietary interactive model we estimate a US$1.2 trillion C-REIT market in 2030 (5% of stock market), with 4% to 8% annualised unlevered returns and low volatility,” UBS estimates. It adds that the C-REIT market could be as large as US$3 trillion by 2030, comprising 11% of the stock market.
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UBS reckons that C-REITs are likely to be attractive investments for domestic investors such as insurance companies because of attractive dividend yields. Additionally, banks could be potential investors if the capital charge becomes more favourable.
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Global investors can access C-REITs through the Qualified Foreign Institutional Investor (QFII) Programme. “We believe [global investors’] participation in C-REITs could be significant if investing restrictions are eased,” UBS says.
