Summary of Key Points
On July 24th, the inter-institutional REITs project initiated by CapitaLand was successfully launched (with a scale of 3.15 billion yuan, representing the largest single investment from foreign capital), marking the cumulative scale of inter-institutional REITs exceeding 100 billion yuan. Since the first deal in December 2023, the market has issued 60 REITs with a total scale of over 102.4 billion yuan, showing extremely rapid growth. In the first half of 2026 alone, 25 REITs were issued (nearly matching the entire amount of 29 issued in the previous year), representing an 11-fold increase in the number and a 24-fold increase in scale. The asset structure is characterized by a "dumbbell" pattern, with a focus on large-scale infrastructure management rights and smaller property ownership interests. While the secondary market has seen increased trading activity, liquidity remains uneven. In the future, supply is expected to double, with foreign capital and emerging assets becoming highlights; however, this also brings risks related to liquidity and asset quality.
I. Why Is the Inter-Institutional REITs Market Growing So Fast?
Inter-institutional REITs (real estate investment trusts traded among institutional investors) have developed from scratch in less than three years and have already reached a scale of 100 billion yuan, which is impressive. Key statistics include:
- Scale Milestone: With the completion of CapitaLand's project, the total scale has exceeded 102.4 billion yuan.
- Exponential Growth: In the first half of 2026, 25 REITs were issued (including one refinancing deal), amounting to 36.1 billion yuan, close to the 29 issued in the entire year of 2025.
- Reasons for the Growth Surge: These funds help companies monetize their real estate assets (such as converting highway toll rights or mall properties into tradable securities), providing new investment options for institutional investors. Both supply and demand sides are driven by this trend.
II. The Asset Structure: A Dumbbell Pattern
The market asset structure is asymmetric, with heavy concentrations at both ends:
- Large-Scale Infrastructure Management Rights: These include assets like highways (toll rights) and large-scale energy infrastructure (power plant operations), with each project having a significant scale (in the billions of yuan).
- Smaller Property Ownership Interests: These consist of industrial parks, shopping mall offices, etc., with smaller individual project sizes but a larger number of transactions.
- Market Segmentation: Transportation-related assets have the largest total scale (e.g., highways), while commercial properties have the highest number of issued REITs (e.g., malls), followed by energy-related assets (e.g., photovoltaic power plants).
This structure supports both large-scale infrastructure financing and the revitalization of smaller commercial properties.
III. Active Secondary Market, but Most Products Face Liquidity Issues
The secondary market has become more active recently, but there are several challenges:
- Increased Trading: In 2026, trading accounted for 49.4% of the total transactions, marking a shift from sporadic activity to more frequent trade.
- Liquidity Divergence: The average daily turnover rate is only 0.05%-0.29%, indicating that most products are "available for sale but difficult to trade" – investors may struggle to find buyers or have to sell at reduced prices.
- Concentration of Transactions: Trading is largely concentrated in a few popular products, with the majority remaining almost untraded.
IV. Market Outlook: Doubling of Supply and Emerging Assets as Highlights
CICC (China International Capital Corporation) predicts that supply will double by the end of the year, with three major trends:
- Accelerated Foreign Capital Engagement: CapitaLand is a prime example; currently, private companies and foreign investors account for nearly 30% of issuers, higher than in similar markets.
- More Efficient Issuance Processes: Pre-registered issuance (one registration for multiple releases) and refinancing will become more common, eliminating the need for repeated approvals.
- Entry of Emerging Assets: New sectors such as data centers, distributed photovoltaics, and battery storage will become underlying assets for REITs.
- Value Recognition: Long-term investors (e.g., insurance companies and pension funds) are using REITs to match their liabilities, while asset management firms use them to enhance returns.
V. Opportunities and Risks: Three Key Points for Investors
While there are opportunities, investors must also be aware of potential risks:
- Risks: 1. Liquidity risks (low turnover rates, difficulty in selling assets). 2. Diverging asset quality (the stability of emerging assets like data centers remains to be proven).
- Investment Recommendations: When selecting projects, consider three key aspects:
1. Asset Quality: The stability of cash flows (e.g., from highway tolls or mall rents) and the authenticity of operational data.
2. Protection Mechanisms: The presence of dividend mechanisms and risk mitigation measures (e.g., safeguards in case of asset devaluation).
3. Issuer Credit: The reliability of the issuing entity (e.g., established foreign investors like CapitaLand or leading domestic companies).
Inter-institutional REITs are at a new milestone of over 100 billion yuan, presenting both opportunities and challenges. Choosing the right projects is crucial to reap the benefits.