On February 26, the first city renewal project, the Huaxia Jinyu Smart Manufacturing Factory REIT, debuts on the Shanghai Stock Exchange (SSE). Following closely, the Huitianfu Jiuzhoutong Pharmaceutical REIT is set to start trading on February 27. This development marks a significant growth in the public REITs market, which now boasts a total of 63 listed products.

Entering 2024, there has been a noticeable acceleration in the issuance of public REITsIn the entirety of last year, 29 new products were launched, while this year has already seen five products hit the market, with an expansion in asset categories to include transportation infrastructure, logistics, and affordable rental housing, totaling nine different asset classesAs the market slowly matures, the demand from investors for high-quality assets continues to riseExperts emphasize that for the public REITs market to further grow, there is a need to simplify the issuance process, optimize valuation and trading systems, broaden long-term capital participation, and enhance the mechanism for additional offerings while deepening specialized legislation.

The number of industrial park REITs has also reached a total of 17. The Huaxia Jinyu Smart Manufacturing Factory REIT fundamentally attracts investors seeking stable returns, achieving remarkable capital support during its offering phaseThe public offering, which ran from January 17 to January 20, was priced at 2.839 yuan per share, with an initial fundraising scale of 1.136 billion yuanInvestor interest was so high that the public offering closed early, amassing 40.3871 billion yuan ahead of planThe confirmation ratios for public and offline investor subscriptions were 0.346% and 1.392%, reflecting staggering oversubscription rates of 288.787 times and 71.83 times, respectively.

At its core, the Huaxia Jinyu Smart Manufacturing Factory REIT revolves around the asset of the Jinyu Smart Manufacturing Factory's Phase I project, located in the Xisanqi area of Haidian District, Beijing

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This site previously served as the production base for Jinyu Tiantan Furniture Company until 2017. As Beijing's urban functional positioning evolved, Jinyu Group repurposed the former factory into an innovative technology industrial park, focusing on smart manufacturing while incorporating ancillary industrial supportThe project spans a total building area of approximately 90,900 square meters.

According to reports, the Phase I project has transformed into a mature and stable industrial park in Beijing's eastern area, specifically in the Dongsheng districtIt’s geared towards smart manufacturing and industrial research, catering primarily to tenants involved in technology promotion and application servicesAs of September 30, 2024, the total rentable area of the factory was 84,944.41 square meters, of which 76,669.37 square meters were successfully leased out, amounting to a leasing rate of 90.26%. Having been in operation for over six years, the project has reached its maturity phaseThe infrastructure assets are collectively valued at approximately 1.108 billion yuan, with the fund's issuance announcement indicating a projected annual cash flow distribution rate of 6.96% for 2025.

Since the initial public offering of the first batch of public REITs in June 2021, which included products like the Bosera Shekou Industrial Park REIT, the number of industrial park REITs has consistently grown to a total of 17, making it the most populous category of listed products.

Industry insiders assert that industrial parks serve as critical vehicles for industrial developmentWith the ongoing optimization and upgrading of China’s industrial structure, various industrial parks are poised to seize new growth opportunitiesThe advancement of these industries not only promotes the construction and operation of the parks but also leads to raised occupancy rates and rental prices, effectively enhancing the asset value and return rates of industrial park REITs

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Additionally, the growing REITs segment fosters greater financial backing for these parks, facilitating their upgrade and expansion, leading to a beneficial loop between industry and the REITs market, thereby continuously scaling the size of industrial park REITs.

This year has seen an increase in issuance rate as wellAs per Wind data, of the 63 products currently listed or set to launch this week, 34 debuted after 2024 beganLooking at the figures from the initiation of the public REITs market in 2021, there were only 11 products launched with a combined issuance size of 36.413 billion yuanThis rose to 13 products and an issuance total of 41.948 billion yuan in 2022. In 2023, only five products were released, gathering 17.092 billion yuan, whereas 2024 has already introduced 29 newly listed public REIT products, achieving an issuance scale of 65.517 billion yuan.

For the new products launched this year, apart from the aforementioned Huaxia Jinyu Smart Manufacturing Factory REIT and the Huitianfu Jiuzhoutong Pharmaceutical REIT, there are three others: Guotai Junan Jinan Energy Heating REIT, E Fund Huawai Market REIT, and AVIC Yishang Warehousing Logistics REIT, with issuance scales of 1.496 billion yuan, 1.516 billion yuan, and 2.102 billion yuan respectively.

As the market begins to enter a stage of normalized issuance, the diversity of public REIT assets is becoming increasingly evidentIn 2024, new projects in the category of consumer infrastructure and water conservancy have emerged, while 2025 is expected to welcome the first municipal facility project.

As of February 26, 2025, public REIT projects have covered nine asset categories, including transportation infrastructure, logistics, and affordable rental housingOf these, transportation infrastructure holds the largest share with 13 projects and a total issuance of 68.771 billion yuanThe industrial park infrastructure and consumer infrastructure categories feature 17 and eight projects, respectively, with total issuances of 27.062 billion yuan and 21.326 billion yuan

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Additionally, energy infrastructure and logistics projects have surpassed the 10 billion yuan mark, each amassing 18.895 billion yuan and 15.363 billion yuan, with both types comprising seven projectsThe affordable rental housing sector encompasses eight projects with a combined scale of 9.419 billion yuan, while ecological and environmental projects contribute two projects with a total issuance of 3.188 billion yuan, plus one each from municipal facilities and water conservancy projects.

Looking ahead, the continuous expansion of the market appears promisingAs investor demands for a broader market scope and higher-quality assets persist, Citic Securities anticipates that by year-end 2025, the domestic public REITs may rise to 85 products, covering a scale of 245 billion yuan.

Additionally, Dagong International has expressed that the cultural tourism and elder care public REITs are projected to debut successfully in 2025, filling existing market gaps, whereas mixed-asset types may pave the way to transcend major industry limitationsSuch developments may also enhance market engagement and participation from investors.

According to Tian Lihui, the Director of the Financial Development Research Institute at Nankai University, the recent normalization of the issuance mechanism since 2024, combined with the simplification of review processes and the expansion of asset categories into fields like elderly care, cultural tourism, and renewable energy, has engendered a dual-driven model of “initial offerings plus additional sales.” Currently, the structure of REITs products has stabilized around the “public funds plus ABS.” This stability has led to improved liquidity in the secondary market, with the China Security REITs Total Return Index increasing by over 9% this year, encouraging both institutional and retail investors to engage more actively.

Tian further asserts that for the public REITs market to expand its scale, it will need to simplify issuance procedures, enhance valuation and trading systems, increase long-term capital participation, and promote strengthened mechanisms for additional offerings alongside comprehensive legal frameworks

Presently, the average issuance cycle exceeds ten months, warranting a reduction in compliance review times, an optimized project valuation approach, and the alleviation of concerns regarding state asset losses, thus incentivizing quality assets from both state-owned and private enterprises to enter the marketMoreover, the promotion of REITs ETFs, index futures, and other derivative products is essential for enhancing pricing functionalities, whereby a mechanism for excluding excessively high quotes in offline bidding should be introduced to balance primary issuance with secondary market pricingThe share of allocating funds from social security and pension funds remains below 25%, confronting the need for policy guidance to enhance their participationAdditionally, requirements for the scale of newly issued assets should be relaxed to support REITs in achieving growth through additional offerings and nurturing flagship projectsA discussion of facilitating independent taxation for REITs, alongside clarifying accounting treatment rules to lower operational costs is also recommended.