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Property experts from Baker Mckenzie’s Hong Kong office have proposed a new “G-REIT” investment tool to accompany mainland China’s ambitious Greater Bay Area (GBA) development initiative announced in February.

The top-tier law firm, which has participated in 10 major REIT IPOs in Hong Kong including Link, Champion and Yuexiu, has floated the investment tool as an additional means for GBA developers to attract and recycle capital, facilitate property supply, and provide an internationally recognized investment product for potential GBA retail investors.

Milton-Cheng-Jeremy-Ong-and-Rico-Chan
From left: Milton Cheng, Jeremy Ong and Rico Chan

Milton Cheng, managing partner of the firm’s Hong Kong office, said the city’s capital markets experience and familiarity with REITS could be leveraged to help with the introduction of a G-REIT. “It is still in development stage in China itself, but we feel that the experience we have through the Hong Kong capital markets could be useful,” said Cheng.

“One of Hong Kong’s key roles within the GBA overall strategy is to be an international financial centre for orderly two-way, cross-boundary capital flow within the GBA,” he explained. “And we think that G-REITs are one meaningful and innovative way in which Hong Kong can fulfil that purpose.”

Rico Chan, head of Baker McKenzie‘s real estate group in Hong Kong, mainland China and Asia, told China Business Law Journal that step one in developing a G-REIT regime was about how to enliven the Hong Kong REIT market by different means, such as further opening up the Stock Connect, a collaboration between the Hong Kong, Shanghai and Shenzhen Stock Exchanges.

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