通过改革释放未来增长:香港房地产投资信托市场愿景

12December2024 Contents Foreword03 Executive Summary04 1HongKong'sREITMarket:Evolutionand Global Standing05Brief History ond Milestones05Market Size: Subdued amid Global Growth20MarketPerformance:Recent Headwinds in aMixed Environment09Asset Diversity: Sector and Geogrophic Concentration10 2.Regulatory Regime12Developmentof H-REITRegulations12ComprativeAnalysisacrossMarkets14 3.Tax Treatment20Mixed TaxPictureforH-REITs20TaxTreatment Comparison:REiTand InvestorLevels21 4.HongKongREITsamidCompetition24Competitive Landscape24ChallengesAhead25HongKong's Strengths27 5.PromisingOutlookforH-REiTMarket286.Recommendations:Positioning HongKongasa PremierREiT Destination31 EndnotesContributorsAboutHKREITAContact Us 40 41 Foreword George HongchoyHonorary Founding President andChairmanHong Kong REITS Assoclation Limited(HKREITA)ExecutiveDirectorandGroupChlefExecutive OfficerLink Asset Management Limited Philip LawChina Real Estate Industry LeaderHong Kong Private Equity LeaderPartner, Deloitte China As global investors increasingly seek portfolio diversification and stable income streams, Real EstateInvestment Trusts (REITs) have emerged as a compelling investment vehicleworldwide.Hong Kong recognisedthis opportunity early,establishing its REiT framework in 20o3.Despite its long-standing presence,thereremains significant potentialfor expansion in both market size and sector diversity.particularly whencompared to the more developed REiT markets in the region. Hong Kong's unigue position as Asia's premier financial centre, coupled with its role as the gateway tothe Chinese mainland, provides an excellent foundation for market development. The city's sophisticatedcapital markets infrastructure, deep ligquidity pool and well-established international investor base create anervironment conducive to sustainable growth. Recent initiatives, including the proposed expansion of theStock Connect programme to encompass RElTs and the extended subsidy scheme for REiT listing expensesdemonstratestrongcommitmenttomarketdevelopment. Building on this momentum, we see opportunities to further enhance Hong Kong's REiT ecosystem throughregulatory refinements, tax optimisation and other market development measures.Drawing on insights fromindustry leaders,we believe that a more flexibleframework would better support marketparticipants andits simple tax system, transparent regulatory environment and strategic location - these changes will helprealisethefull potentialof Hong Kong's REiTmarket. We look forward to working collaboratively with all stakeholders to support the sustained growth and Executive Summary An early adopter of REITs in Asia, Hong Kong was the fourth economy in the region to establish a REIT regime (2003) and thethird to list a REIT on its stock exchange (2005). During its nascent stage, the Hong Kong REIT (H-REIT) market demonstratedapisBuoje 'puejule asauuD aul pue uoy BuoH roq ul 5iaxe qjadoud uipuedxa Aq pasAjelen 'uiwo,B aassaudfirst-mover listings by major institutions, Link REiT's dlebut as the city's first listed REiT set a global benchmark as the world'slargest REIT IPO at the time. Similarly, Yuexiu REIT, another early entrant, maintains an active presence in the market today. This initial surge of growth was short-lived. Two decades after the listing of its first REIT, Hong Kong's market has plateauedat 11 listed REITs a figure that falls short of the numbers seen in other major economies. Beyond cyclical market factorsindustry leaders we interviewed highlighted regulatory requirements and tax considerations as ongoing factors impactinggovernance flexibility and sector development, They believe that enhancing the current H-REIT framework could createa more dynamic market environment, attracting both sponsors and global investors seeking portfolio dliversification andstable returns. Looking ahead, the outlook for the H-REIT market remains promising. The city is implementing measures to revitalise itsREIT market, including the upcoming expansion of the Stock Connect scheme to encompass H-REITs a move that will boostscale, liquidity and investment options while attracting fresh capital., The Government's extension of subsidies to REIT issuersuntil 2027, covering up to 70% of eligible listing expenses, further demonstrates its commitment, Strategically, Hong Kong"sstructural advantages, combined with shifting interest rate trends, signal a potential leap forward for H-REIT prospects To further strengthen the sector, this report recormmends key reforms across regulatory and tax dimensions. Priority areasinclude introducing corporate REIT structures, providing greater flexibility in property holding and development rules, andexisting strengths and recent policy initiatives to boost its appeal as a premier RElT destination Hong Kong's REIT Market:Evolution and GlobaStanding Brief History and Milestones Since its inception in 2003, Hong Kong's REIT market hasevolved from a new sector to an establi