REIT ASIAPAC
Source : GPR , as of September 21 2021
However , for the Hong Kong market to reach its full potential , further developments and policy initiatives are needed . We list them below .
• Tax incentives
For most REIT markets , dividends from REITs are often taxexempt for unitholders to avoid double taxation . However , Hong Kong has not provided any tax incentives on dividends from REITs , thus being less attractive to investors when compared to other markets . Therefore , any progress on lessening the tax burden on REIT unitholders will be helpful .
• Lack of other asset types
The Hong Kong REIT market development has lagged behind other major markets due to a relative lack of depth beyond Link REIT and an absence of diversity in asset classes . Most REITs focus on traditional office or retail properties in Hong Kong . A possible solution to deal with this issue includes further relaxing the regulations on the scope of investments for REITs . This will allow the REITs to grow and diversify their asset base . The government should also consider offering more incentives to attract new REIT listings in Hong Kong . The current subsidies to cover REITs ’ professional fees is a good start .
In summary , we believe that the Hong Kong government is moving in the right direction in its attempt to help the Hong Kong REIT market become more diversified and expansionary . We expect local REITs to take advantage of the relaxed rules and scale under the revised REIT Code to grow their asset base . With the right policy tools , the Hong Kong REIT market will be in a position to become a strong market , especially with potential fund flows from mainland Chinese investors and new listings from China-based REITs .
ABOUT THE AUTHOR
Patrick Ma , CFA has served as Admiral ’ s Research Director since 2016 and subsequently Admiral ’ s Director , Listed Products and Research . Patrick is responsible for the investment research that backs all of Admiral ’ s investment advices and management activities . He is also responsible for Admiral ’ s products in the listed space . Patrick has over 20 years of experience in the securities markets .
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