Hong Kong Real Estate Investment Trusts
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Hong Kong first published its REIT rules in August 2003. They are considered collective investment schemes under Section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).
Hong Kong Real Estate Investment Trusts listed on the stock exchange since December 2005, with the beginning of The Link REIT from the Hong Kong Housing Authority.
The Link REIT is now one of the world's largest REITs.
Hong Kong REITs are Critical Because in Hong Kong, Real Estate is in Short Supply
Real estate has always been a big industry in Hong Kong for the simple reason that the country is just one city, and until 1997, it was separated from greater China behind it. Therefore, it could not expand anywhere except up.
Residential areas and shopping centers are packed. Traffic is extremely congested.
So now the real estate market in Hong Kong is considered one of the most mature in the world, but is still volatile. And Hong Kong is one of the most transparent stock exchanges.
They must pay out at least 90% of their net profits to shareholders as dividends. They must have three or more properties in their portfolio which are now owner-occupied.
Hong Kong Real Estate Investment Trust Requirements
At least 75% of their assets must be in real estate, government securities or cash.
At least 75% of their income must come from rent, mortgages or sale of properties.
They may invest in foreign property, but may not use more than 45% leverage or loan to value ratio. And if they wish to do a joint venture, they must own at least 50% of the property.
Only 10% in property development is allowed. The REIT does pay the property taxes.
Management is required to be external.
REITs in Hong Kong do not pay any taxes on the 90% they distribute to shareholders. However, they do pay corporate taxes on the 10% they do not distribute.
Hong Kong Real Estate Investment Trusts Listed:
The Link REIT -- one of largest REITs in the world.
Sunlight REIT -- office and retail properties in Hong Kong.
Regal REIT -- Regal hotels in Hong Kong.
Champion REIT -- office and retail properties in Hong Kong
GZI REIT -- residential properties in Hong Kong.
Hui Xian REIT -- owns Oriental Plaza in Beijing
Prosperity REIT -- owns office buildings in Hong Kong.
>Fortune REIT -- fourteen shopping malls in Hong Kong.
Therefore, Hong Kong Real Estate Investment Trusts are a terrific way to profit from investing in Hong Kong's economic activity.
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