In the Deloitte report titled Unlocking Future Growth through Reform: A Vision for Hong Kong REIT Market, suggestions by market participants include introducing corporate structures for H-REITs, while maintaining asset protection through independent custodians. This flexibility would also enable participation from institutional investors that face restrictions on trust investments or fund-of-funds structures, ultimately strengthening Hong Kong’s competitive position against other marketplaces as a preferred REIT domicile.
On Dec 12, the Hong Kong REIT (H-REIT) market, Hong Kong REITs Association (HKREITA) and Deloitte China released a report on views to revitalise the H-REIT sector with feedback from market participants.
For instance, H-REITs are formed under a unit trust structure which faces capital-raising challenges. Although H-REITs can use debt or equity for funding, equity issuance approval and leverage limits especially restrict smaller REITs’ growth. H-REITs are also required by the REIT Code to retain properties for at least two years, impacting divestment timing based on investment strategy.
