Revised Code on Real Estate Investment Trusts (REITs) has been gazetted by the Securities and Future Commission (SFC). Hong Kong’s REIT portfolios have been widened to offer investors a diverse choice, from retail properties to commercial and hotel properties, and to properties in Mainland China.
Under REITs an investor is getting permission now to invest in properties under development or engage in property development activities; and to purchase financial instruments (including listed securities, unlisted debt securities, government and other public securities, and local or overseas property funds), subject to at least 75 percent of the gross asset value (GAV) of a REIT being invested in real estate that generates recurrent rental income at all times.
The SFC said the revised Code will facilitate the long-term growth of Hong Kong’s REIT market, and said Hong Kong’s regime is broadly in line with regulations in comparable international markets. In the conclusion of its report, the Council recommended the removal of profits tax on REITs. However, the SFC said in response that, while such removal could be expected to be beneficial to Hong Kong REITs, it should be noted that currently – unlike other jurisdictions.
