Several real estate companies are competing to enter commercial real estate REITs, with total funds raised exceeding 46 billion yuan, including private enterprises such as Xincheng and Star River.

Financial Times Reporter | Wang Yuhan

Financial Times Editor | Li Shen

Since the China Securities Regulatory Commission officially launched the pilot program for commercial real estate public REITs at the end of 2025, China’s public REITs market has ushered in a new wave of development, with the capitalization process of existing commercial real estate assets accelerating across the board.

As of March 20, the Shanghai and Shenzhen stock exchanges have received a total of 15 project applications, with proposed fundraising exceeding 46 billion yuan. Among them, seven real estate companies, either as original equity holders or underlying asset owners, are deeply involved, accounting for nearly half.

“The current round of commercial real estate REITs applications shows a diversification of formats, not limited to shopping centers but also including hotels, office buildings, apartments, commercial streets, and mixed-use formats; the urban tier has also expanded from first-tier cities to second- and third-tier cities,” said Wu Jinhui, senior researcher at Zhongzheng Pengyuan Research Department and head of the macro and REITs research team, in an interview with Jiemian News. “However, at the same time, asset quality and compliance risks also need to be closely monitored.”

From “breaking the ice” to “accelerating,” commercial real estate REITs not only provide an efficient channel for revitalizing existing assets but also profoundly reshape the business models and capital logic of the real estate industry.

Homebuilders Become Main Participants

In this wave of applications, the participation of homebuilders has significantly increased. Among the 15 projects, seven involve real estate companies, with an estimated total fundraising of over 17.3 billion yuan. Participants include leading and regional giants such as Poly Developments, Sunac China, and Shoukai Holdings.

In terms of asset types, a variety of formats are covered, including shopping malls, office buildings, commercial complexes, hotels, etc. Regarding city tiers, projects have expanded from initial focus on first-tier cities to more cities of different levels.

Looking further at some representative companies, Poly Developments is the first listed A-share real estate company to apply for commercial real estate REITs. Its selected assets are located in two core cities of the Guangdong-Hong Kong-Macau Greater Bay Area: the landmark office building “Poly Center” in Zhujiang New Town, Tianhe, Guangzhou, and the mature shopping center “Poly Water City” in Foshan’s Financial CBD.

Shanghai Real Estate Group, as a local state-owned enterprise, has applied for REITs with underlying assets consisting of two high-quality office buildings in the Shanghai Huangpu Expo Riverside area—Dingbao Building and Dingbo Building. The two projects are only about 500 meters apart, with significant location advantages. As of the end of 2025, their occupancy rates are close to full, and in 2026, the distribution rate is expected to reach 4.5%, aligning with the current core goal of state-owned assets preservation and appreciation.

Notably, private enterprises are also beginning to appear. Xinghe Group, a representative of non-listed real estate companies, has also joined the application process. The active participation of private enterprises reflects, from one perspective, that the market appeal of commercial real estate REITs has surpassed ownership boundaries.

“From the projects already filed this year, the participants have expanded from early government platforms and state-owned assets to include central enterprises, local state-owned enterprises, foreign capital, and private companies, forming a diverse participation pattern. This indicates that the public REITs market system is continuously improving and gradually maturing,” said Xie Chen, head of research at CBRE China, in an interview with Jiemian News.

Why are homebuilders becoming a key force in this round of commercial real estate REIT applications?

Yen Yuejin, deputy director of the Shanghai E-House Research Institute, analyzed for Jiemian News that in the past, the role of homebuilders in the REIT-like market was marginal mainly due to the lack of standardized, publicly listed exit channels. The launch of public REITs allows homebuilders to recover funds by transferring project equity or retaining operational rights.

“This reduces leverage in two ways: first, asset off-balance-sheet improves debt ratios; second, the raised funds can be used to repay existing debts or invest in new projects, improving cash flow,” Yen Yuejin explained. Currently, many homebuilders are applying for REITs with their commercial plazas as underlying assets and plan to participate in strategic placements proportionally. This “retain core shares + activate existing assets” model both locks in future operational income and enables current capital recovery, representing a typical “light-heavy combination” transformation path.

Xie Chen added from a tool perspective: “Public REITs are essentially ‘real estate stocks,’ broadening financing and light-asset transformation paths for developers, while also providing institutional and retail investors with a more liquid and transparent platform to participate in quality projects.” He sees this as an important lever to promote high-quality development of capital markets and the real estate industry.

Deeper changes are occurring in the profit logic of homebuilders under the REITs framework. While realizing asset monetization, they retain long-term ties to assets by holding some shares or serving as operational management entities. Profit sources are shifting from one-time gains from development and sales to ongoing income from management fees and operational performance commissions. This income structure is more stable and directly linked to operational efficiency, pushing homebuilders to transform from traditional developers into professional asset managers.

Market Booming, Regulation Steady

Behind the expansion and acceleration is the strong market performance of the first batch of projects and the regulatory principle of “prioritizing high-quality projects and maintaining stability.”

“The core of REITs is the cash flow of underlying assets. The policy focus remains on ensuring assets meet listing requirements, such as yield, compliance, and procedures, to ensure steady and healthy market development,” Wu Jinhui told Jiemian News.

This principle is clearly reflected in the projects already accepted. According to Jiemian News’ observations, the commercial REITs funds currently under review generally have underlying assets located in core areas of first- and strong second-tier cities, with occupancy or opening rates maintained above 90% for a long time. Most original equity holders are central state-owned enterprises, leading private companies, or foreign institutions with strong asset operation capabilities and credit backing.

Feedback from the accepted projects indicates that inquiries mainly focus on asset quality, cautiousness in occupancy rate forecasts, and risks related to lease expirations. “This shows that regulators are guiding the market to establish rational valuation expectations and avoid overly optimistic pricing bubbles in the initial projects,” said Yen Yuejin.

Huatai Securities Research pointed out that for compliance issues, regulators assess the significance based on whether they affect the legal transfer and ongoing operation of assets, adopting different handling approaches accordingly. If the project meets issuance and listing conditions and can effectively protect investors’ rights, it may be processed through supplementary filings, explanations from authorized departments, risk disclosures, and mitigation measures. This “case-by-case” flexible approach both guards against risks and leaves room for project advancement.

Trillion-Yuan Market Expected

With the gradual progress of the approved projects and more companies joining, 2026 is expected to become the “listing year” for commercial real estate REITs.

Regarding the market outlook for this year, Xie Chen offered his view: “In 2026, commercial real estate REITs will be gradually accepted, approved, and listed. The market trend mainly depends on developers’ financing needs and enthusiasm for capital allocation. Currently, both drivers are strong, and the number of applications and issuances is expected to remain high throughout the year.”

Wu Jinhui also expressed optimism: “The issuance of commercial real estate REITs marks China’s REITs entering a rapid development stage, with continued quality improvement and expansion. Over the next two to three years, driven by both initial offerings and secondary offerings, the market size of China’s REITs could exceed 500 billion yuan.” He further pointed out to Jiemian News that real estate REITs will continue to play a role in revitalizing existing assets and supporting economic transformation, aligning with the “14th Five-Year Plan” requirements.

In addition to the 15 projects already filed, many more are in reserve. According to incomplete statistics from Jiemian News, several listed companies such as Maoye Commercial, Wushang Group, and Rainbow Department Store have announced they are preparing or researching REITs issuance, with asset types expanding further into community commerce, long-term rental apartments, and other fields.

Long-term, China’s commercial real estate REITs have enormous development potential. The stock scale of commercial real estate in the country is vast, with hundreds of millions of square meters of Grade A office buildings and large retail properties in key cities, providing a broad underlying asset pool for REITs.

Of course, the market is still in its early stages, and many areas need improvement. Wu Jinhui reminded that “the current market is still relatively small, and companies’ enthusiasm needs to be further stimulated. There is limited incremental capital, and secondary market expansion is immature. policies and supporting systems need further refinement.” He suggested that cautious policies should be introduced, with appropriate policy incentives to support healthy development.