China broadens REIT market to embrace commercial real estate

/ EdgeProp Singapore

February 23, 2026 6:11 PM SGT

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Shanghai skyline. China has launched a pilot programme for commercial property REITs, marking a new phase for the C-REIT market (Picture: Ralf Leineweber/Unsplash)

China’s REIT market is expanding to include a broader scope of commercial properties. On Dec 31 last year, the China Securities Regulatory Commission announced the launch of a pilot programme for commercial property REITs, which can include office, hotel, retail and mixed-use properties as its underlying assets.

According to a February research report by the Asia Pacific Real Assets Association (Aprea), the pilot signals China’s broader effort to move its property sector away from a debt-driven development model towards one centred on long-term operations, cash flows and professional asset management.

For David Chen, chairman and CEO of FOG Capital & Asset Management, the new class of REITs will be a significant boost for the wider property market. “China’s commercial property C-REITs launch is one of the most significant signals of the reactivation of China’s cloudy real estate market,” he remarks in the Aprea report.

He adds that for landlords, the implications are “far-reaching”, with owners of hotels, retail and mixed-use facilities having a scalable exit channel through securitisation.

Positive response

The market appears to share Chen’s view, with a positive early response to the pilot. According to Aprea’s report, the Shanghai Stock Exchange accepted applications for eight commercial REITs within a month of the pilot launch.

The REITs, which are expected to raise an estimated RMB31.5 billion ($5.77 billion), are backed by a mixture of hotels, offices, mixed-use complexes and shopping centres connected to real estate companies including Shanghai Land Group, Lujiazui Properties and CapitaLand Investment.

Kong Lingyi, managing director and chief investment officer of SCGC Realty Capital, highlights that the programme marks a structural shift that coincides with changing investor behaviour. “Investor focus is shifting from capital appreciation towards cash flow quality and from short-term trading opportunities to a through-the-cycle investment mindset,” she notes.

The pilot is the latest milestone in the nascent C-REIT market. China launched its first onshore REITs in June 2021, focusing on infrastructural assets such as toll roads and industrial parks. Since then, the market has gradually turned its attention to the commercial space, as REITs have become more established within China’s capital market landscape.

In 2023, the REIT programme was expanded to include “consumer-related infrastructural projects”, such as department stores and shopping malls. Around the same time, private REITs were introduced on the Shanghai Stock Exchange (SSE), and are restricted to institutional investors but cover a wider scope of commercial assets. In November 2025, hotels and offices were added as eligible assets under China’s infrastructure REIT programme.

The changes have helped the C-REIT market gain further traction, with Aprea noting around 50 property-related infrastructure REITs listed as of the end of 2025. However, they remain a fraction of China’s commercial real estate landscape, accounting for less than 0.5% of the market’s US$5.9 trillion ($7.46 trillion) value as of mid-2025 – far lower than in the US, where the figure stands at around 10%.

To that extent, the C-REIT market has a lot of room for growth, especially as declining interest rates bolster its appeal to yield-seeking investors. “Under China’s current low-interest-rate environment, the REITs pilot will play an important role in helping with the valuation rediscovery of China’s commercial properties and will provide a new investment product for investors,” comments Garcia Xia, partner at Ernst & Young China.

New growth segments

As the C-REIT market continues to evolve, it will likely expand into more asset classes. FOG’s Chen counts rental housing, data centres, supercomputing and large-scale mixed-use urban complexes among the segments to watch, particularly in prime locations and in first- and second-tier cities.

SCGC’s Kong concurs on rental housing, adding that energy infrastructure could also be a new growth area, given rising power demand driven by AI and related technologies. Additionally, Ernst & Young’s Xia notes that elderly care housing and healthcare facilities are seeing growing demand amid demographic shifts. The availability of REIT exit channels could direct more capital into these areas, particularly through pre-REIT or private REIT recycling, he says.

Meanwhile, international-sponsored listings are helping to catalyse more improvements in the C-REIT landscape. Last September, CapitaLand Commercial C-REIT debuted on the SSE, making it the first international-sponsored retail C-REIT in China. The REIT, which raised RMB2.29 billion, debuted at 19.6% higher than its IPO price.

The successful listing, together with the wider inclusion of commercial properties in the public REIT domain, points to a REIT market that is opening up. “China’s C-REIT market is poised for expansive growth as more international sponsors and institutional capital are attracted to participate, further increasing liquidity and strengthening China’s position in Asia’s capital markets,” remarks Puah Tze Shyang, CEO of CapitaLand Investment China.

However, challenges remain as the tightly regulated landscape moves towards a more market-orientated system. For SCGC’s Kong, global investor participation will depend on progress in RMB acceptance, cross-border capital flows, tax certainty, and alignment with international disclosure, governance and ESG standards.

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China broadens REIT market to embrace commercial real estate

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