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.

How AI · Commercial Real Estate REITs Help Property Developers Reduce Leverage

Reporter | Wang Yuhan

Editor | Li Shen

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

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, 7 property 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 features diverse formats, not limited to shopping centers but also including hotels, office buildings, apartments, shopping streets, and mixed-use developments; the urban tiers are also expanding from first-tier cities to second- and third-tier cities,” said Wu Jinhui, senior researcher at the China Securities Pengyuan Research Department and head of the macro and REITs research team, in an interview with Jiemian News. “However, asset quality and compliance risks also need close attention.”

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.

Property Developers Become Main Participants

In this wave of applications, the participation of property developers has significantly increased. Out of the 15 projects, 7 involve property companies, with an estimated total fundraising of over 17.3 billion yuan. Participants include leading and regional giants such as Poly Developments, Xincheng Development, and Shoukai Holdings.

In terms of asset types, a variety of formats such as shopping malls, office buildings, commercial complexes, and hotels are covered; in terms of city tiers, projects have expanded from initial focus on first-tier cities to more diverse urban levels.

Summary of 7 property developer applications for commercial real estate REITs
Compiled and illustrated by Jiemian News

Looking at some representative companies, Poly Developments is the first listed property company on the A-share market to apply for a commercial real estate REIT. 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 a REIT 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 nearly 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 emerging. Xinghe Group, representing non-listed property firms, has joined the application process. The active participation of private companies reflects 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-stage government platforms and state-owned assets to include central enterprises, local state-owned enterprises, foreign investors, 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 property developers becoming key players in this round of commercial real estate REIT applications?

Yan Yuejin, deputy director of the E-House Research Institute in Shanghai, explained that in the past, developers played a marginal role in the REIT-like market mainly due to the lack of standardized, publicly listed exit channels. The launch of public REITs allows developers to recover capital by transferring project equity or retaining operational rights.

“This helps reduce leverage in two ways: first, asset off-balance-sheet optimization of debt ratios; second, the raised funds can be used to repay existing debts or invest in new projects, improving cash flow,” Yan said. Currently, developers are applying for REITs by using their commercial plazas as underlying assets and planning to participate in strategic placements proportionally. This “retain core shares + activate existing assets” model both locks in future operational income and enables immediate capital recovery, representing a typical “light and heavy” transformation path.

Xie Chen added from a tool perspective: “Public REITs are essentially ‘real estate stocks,’ broadening financing options for developers and facilitating light-asset transformation, 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 for promoting high-quality development of the capital market and the real estate industry.

Deeper changes are occurring in the profit logic of property developers under the REITs framework. While realizing asset monetization, developers can retain some shares or serve as operational managers, maintaining long-term ties with the assets. Profit sources are shifting from one-time gains from development sales to ongoing income from management fees and operational performance commissions. This income structure is more stable and directly linked to operational efficiency, pushing developers to transform from traditional “developers” to 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 quality projects and maintaining stability.”

“The core of REITs is the cash flow from 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 emphasized.

This principle is clearly reflected in the projects already under review. According to observations, the underlying assets of the currently accepted commercial REITs are mainly located in core areas of first- and strong second-tier cities, with occupancy or opening rates consistently above 90%. Most original equity holders are central state-owned enterprises, leading private firms, or foreign institutions, with strong asset operation capabilities and credit backing.

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

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. If projects meet issuance and listing conditions and effectively protect investors’ rights, they may adopt flexible handling measures such as re-application, explanations from authorized departments, risk disclosures, and mitigation measures. This “case-by-case” approach balances risk control with project advancement.

Trillion-Yuan Market Expected

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

Regarding this year’s market outlook, Xie Chen expressed optimism: “In 2026, commercial real estate REITs will gradually be accepted, approved, and listed. The market trend mainly depends on property 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 remained positive: “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 could exceed 500 billion yuan.” He further pointed out 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.

Chart: China’s public REITs fundraising scale and issuance types
Source: Huatai Research

In addition to the 15 projects already filed, many other projects are in the pipeline. According to incomplete statistics by Jiemian News, several listed companies such as Maoye Commercial, Wushang Group, and Rainbow Department Store have announced plans to initiate REITs issuance or research, expanding asset types to community commercial centers, long-term rental apartments, and more.

Long-term, China’s commercial real estate REITs have enormous growth potential. The domestic commercial real estate stock 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, with many areas needing improvement. Wu Jinhui advised, “The current market is relatively small, and companies’ participation 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 recommended cautious implementation of contraction policies and suggested offering more policy incentives where appropriate.