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Rapid Development of REITs in China
2007-11-02 17:13:56     Sources : back

Rapid Development of REITs in China - The Consequence of the Implementation of the Valuation System of China Commercial Property

SHENZHEN, China, July 23 /Xinhua-PRNewswire/ -- The biggest functionalevent in retailing and commercial property in PRC -- The China Commercial Property Expo 2007 (Expo) & The Press Release of the Valuation System of China Commercial Property (VSCCP), leaded by the Ministry of Commerce of PRC and organized by China General Chamber of Commerce (CGCC), co-organized by China Real Estate Association (CREA), International Academy of Professional Investment Management (IAPIM), Society of International Registered Financial Practitioner (SIRFP) and over 10 other both Chinese and international bodies, will be held in Shenzhen, China, on August 18-20,2007.

In the Expo, over 1,000 Chinese famous corporations in retail trade, such as Bailian Group, BJ Wang Fu Jing and Gome, and over 600 representatives and managements from government bodies and associations in various related industries and cities in PRC, developers and builders of commercial property in PRC, such as Wanda Group and China Poly Group, will attend the activities and forums arranged.

Mr Liu Jian Hu, Secretary of the Expo and the Vice-Secretary of CGCC said, ''Under the great support of the Ministry of Commerce, it is the first time in China to nominate various major mass medium to organize national Expo in commercial property jointly together and so it highlights the importance and recognition of the Expo. With the aid of the networks and resources of the medium, that cover most of the major cities and regions in PRC, the Expo provides an open platform, in the senses of both in promotion and interaction, for the project side and investment side.

Besides, the VSCCP is the first professional, systematic and technical value assessment mechanism in PRC, focused on the investment value of the commercial property project assessed. It plays an important role in
'linking' between the property developers and investors in China and overseas with its fully official recognized assessment system.'' Mr William Wu, the person-in-charge of the VSCCP, the Senior Consultant of the Committee of Experts of CGCC, Chairman of the Professional Development Committee of SIRFP, Director (Great China) of IAPIM, said, ''The Expo fully utilizes the strengths and connections of CGCC and CREA in gathering the major corporations in retailing and developers and builders of commercial property in China, and the networks and resources of SIRFP
and IAPIM in bunching the overseas institutional and individual investors. Throughout the development and practical experience gained of various sectors related to the real estates in PRC, more and more developers and builders realize that only the dynamic integration and balance among the project, the developer and investor, would bring the optimization of the 'commercial value' of the property. Therefore, the Expo will then be one of the best opportunities for them to meet and share.''

William further suggested that the developers in PRC are now looking for more financing channels and new financial models to cope with the tightening macro-control by the central government. However, most of the developers can only provide 'subjective commercial value' of the projects, quoted by themselves under no wide-accepted common valuation system, to potential overseas investors and/or financial sectors. Such subjective quotation and valuation give no evidence in terms of security, stability and profitability of the projects. Therefore, seldom, if not none, commercial property projects can successfully pass the assessing procedures required by the overseas investors. Under the great support of related government bodies, CGCC initiates an operation to design a systematic, professional, wide accepted and scientific assessing mechanism -- the Valuation System of China Commercial Property (VSCCP), in two years time with the aid of some local and oversea professional organizations. VSCCP helps about 3,000 commercial property projects (includes some stars hotels) of over 25,000 square meters each to obtain fair assessments with international standard gradually. The 'A-B-C' rating system of it gives a clear and simple picture to investors in collecting overall commercial value of the project. Valuable commercial property projects are then easily to be identified and determined by investors. Consequently, the selling model of commercial property would then be changed from traditional 'commodity' to contemporary 'financial product'. Such a change fosters not only the healthy development of Chinese commercial property market and also the rapid growth of more new real estate investment trusts (REITs) in PRC.