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How to start a REIT ETF in Hong Kong?

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  1. #1

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    How to start a REIT ETF in Hong Kong?

    I am curious. How does one start a REIT ETF in Hong Kong, and have it sold in the HK Stock Exchange? Is it a very easy thing to do?


  2. #2

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    Technically, anything is "very easy" if you have the right amount of cash and appropriate institutional/tycoon backing.

    If you were to start one, what sort of REIT would it be? Most commercially viable property and large land banks are already in the hands of property developers?

    Or did you mean that you'd start an ETF which would then hold a basket of Link and other HK specific REITs?

    PetravanderVegt and hannah01 like this.

  3. #3

    REITS are authorised by the SFC in HK and listed on SEHK. The REIT itself has to comply with the SFC's REIT Code. One of the many requirements for authorisation is the appointment of a manager which is authorised by the SFC. It's a lengthy and expensive process.

    The REIT will also need to own the underlying property(s) from the beginning (i.e. you can't create a REIT, raise the money and then go out and look for properties).

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  4. #4

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    I meant an ETF with different REITS and developers. Strange nobody has started one. With the interest on properties by Hong Kong people, it should be a no brainer.

    Last edited by john_1122; 25-06-2020 at 10:20 AM.

  5. #5

    From a regulatory process it's similar to for a REIT - the fund manager has to be licensed by the SFC and the fund has to be approved under the SFC Code on Unit Trusts and Mutual Funds (instead of the REIT Code).

    There's already an ETF which invests in HK and China: LIPPO HK&M PROP (02824.HK) - Detail Quote

    I haven't looked under the hood but it's very small with no turnover.

    Possibly one reason there hasn't been a push is that the local HSI has historically been heavily weighted towards property companies. This is slowly changing, but investors who want diversification which includes property can always buy an index fund.

    john_1122 likes this.

  6. #6

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    Thank you. I didn't know about that fund. Looks like I have to do another career path


  7. #7

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    It would probably be easier to set up a brokerage which deals in odd lots and provide managed funds which buy a basket of these existing REITs for your clients. You'd need a type 2 and type 9 license with the SFC to operate this kind of business.

    I'm not sure how many clients you would like get but it could be used by younger people who are saving up to buy their first property as a way to gain exposure to the property market. Although these days most REITs deal mostly in commercial and increasingly mainland based property.


  8. #8

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    If you're looking for a REIT / Property ETF with Asia focus... might want to consider IASP

    (Usual caveats apply...)

    https://www.ishares.com/uk/individua...ield-ucits-etf