Hong Kong Housing Authority Prepares To Launch First REIT

by Mary Swire, Tax-News.com, Hong Kong

12 November 2004

According to a report by Dow Jones, the government of Hong Kong will begin marketing its first real estate investment trust (REIT) early next week.

The government plans to commence a series of roadshows starting in Hong Kong on November 15 and moving to other financial centres such as London, New York and Singapore.

Earlier in the year it emerged that the Housing Authority is planning to sell 130 shopping malls (around 11% of the city’s retail space), and around 100,000, or 60%, of the city’s car parking spaces in a deal that analysts expect to be worth some US$2.5 billion.

A REIT is a form of collective property investment vehicle where the investor owns shares or units in a fund that invests in a range of commercial property (such as offices, industrial units, shops and shopping centres) or residential property (such as houses and flats).

A reduced amount of tax is paid at the level of the REIT, provided that most of the income generated is distributed to investors in the form of a dividend.

Reports suggest that the Hong Kong Housing Authority's Link REIT will offer a dividend yield of 6.8% in 2005 and 7.2% in 2006.

The source revealed that the REIT is scheduled to be listed on December 16.

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