Updated March 12th, 2024 at 11:13 IST

China's first consumption REITs witness early trade decline in Shanghai

China's first consumption REITs, introduced by China Jinmao and Wumart, experience slight dips in early Shanghai trade.

Reported by: Business Desk
Representative | Image:Freepik

China REITs decline: The initial trading of China's inaugural pair of consumption-oriented Real Estate Investment Trusts (REITs) in Shanghai saw a decline, reflecting investor wariness towards property assets and deflationary pressures in the economy.

These REITs, introduced by developer China Jinmao and retailer Wumart, experienced slight dips in early trading. Specifically, Huaxia Jinmao Commercial REIT fell by 0.4 per cent, while China's Harvest Wumart Consumer REIT slipped by 2.2 per cent as of 0157 GMT.

China had widened the REITs' scope last year to encompass commercial properties, aiming to support the struggling property sector. This move allows investor funds to flow into property ownership while enabling developers to exit projects.

Notably, China Vanke and China Resources Land are also amongst the project owners for the initial batch of approved consumption-related REITs.

Despite these assets being deemed valuable, investors find their prices high, particularly amidst current macroeconomic conditions, as observed by a REITs-focused investment manager in Shanghai.

With a substantial pipeline of REITs, investment firms like Cypress Investment Management Co are exercising caution, opting for a wait-and-see strategy.

Although the CSI REITs Index endured a 28 per cent decline in 2023, it has rebounded by approximately 8 per cent this year.

Another commercial REIT, supported by China Resources Land, is slated for listing on the Shenzhen Stock Exchange on Thursday.

(With Reuters Inputs)

Published March 12th, 2024 at 11:13 IST