Hong Kong Starts REIT Subsidy Plan To Make Up For Lost Decade As Rival Markets Flourish From Singapore To Japan (South China Morning Post)
May 17, 2021 – Hong Kong is trying to make up for a lost decade with incentives to promote the city as a hub for real estate investment trusts (Reits), after a stop-start history during which markets in Singapore and Japan flourished.
The government last week put into action a HK$270 million (US$35 million) plan to encourage property owners to cobble their assets together under Reits to defray their listing expenses. The Securities and Futures Commission on May 10 announced the implementation details of the subsidy plan, first unveiled during the budget in February.
The grant will also be offered to fund managers who launch open-ended funds in Hong Kong.
The subsidy, however, has drawn flak from shareholder activist David Webb, who called it a “cockamamie” scheme that only favours bigger tycoons. Others said the benefits do not go far and wide enough.
“By encouraging a broader range of investment vehicles, the grant scheme will reinforce Hong Kong’s role as a leading capital-raising venue and its status as an international asset and wealth management centre,” the SFC’s chief executive, Ashley Alder, said.
The plan comes as SF Real Estate Investment Trust – which holds the logistics assets of Shenzhen-listed package delivery group SF Holdings – started trading in Hong Kong after completing its HK$2.5 billion initial public offering last week.
SF Reit became only the 13th such investment vehicle on the Hong Kong stock exchange since Fortune Reit first blazed the trail in 2003. The market went into a hiatus between 2013 and 2018, according to official data. China Merchant Commercial Reit was the last to make it to the exchange, back in December 2019.
The Hong Kong stock exchange hosted 12 Reits as of May 14 with a combined market capitalisation of HK$248.31 billion, including two that have been halted from trading. While the industry went into a slumber, other regional Reit markets bloomed.
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