China's ambitious social housing initiatives may foster growth in the country's infrastructure real estate investment trust (REIT) market, S&P Global Ratings said in a Wednesday release.
The rating agency estimates a doubling in the number of social housing infra-REITs within the next 18 months, as well as further expansion as the two markets exhibit synergies.
Listing social housing assets as infra-REITs raises the credit profiles of the originators, which are mostly state-owned enterprises, S&P said.
Although these issuances dilute ownership stakes to between 20% and 50%, the original operators will retain responsibilities and continue fulfilling policy objectives, the rating agency said.
Proceeds from listings could also fuel further investment in social housing projects, according to S&P.
However, not all projects are suitable for listing due to return requirements and financing costs, the rating agency said.
Social housing projects in higher-tier cities are generally more viable for REIT listings compared to those in lower-tier cities, S&P said.
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