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SFC proposes changes to the Code on Real Estate Investment Trusts


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The Securities and Futures Commission (SFC) today began a two-month consultation on proposals to amend the Code on Real Estate Investment Trusts (REITs) to provide Hong Kong REITs with more flexibility in making investments.

The proposed changes include allowing REITs to make investments in minority-owned properties (Note 1) and in property development projects in excess of the existing limit of 10% of gross asset value (GAV) subject to unitholders’ approval (Note 2), as well as increasing the borrowing limit for REITs from 45% to 50% of GAV.

“Updating the regime to give REITs more flexibility in making investments will better position Hong Kong to host more of these listings whilst ensuring investor protection, and facilitate the long-term growth of the Hong Kong REITs market,” said Mr Ashley Alder, the SFC’s Chief Executive Officer.

In formulating the proposals, the SFC made reference to comments from industry participants and regulatory developments in comparable overseas jurisdictions. The proposals also emphasise the continued importance of ensuring that REITs operate primarily as recurrent rental income generating vehicles.

The SFC also proposes to broadly align the requirements for REITs’ connected party transactions and notifiable transactions with the requirements for listed companies, in line with existing policy and practices.

The public is invited to submit their comments to the SFC on or before 10 August 2020.



  1. These investments would be subject to various conditions and requirements as set out in the consultation paper. Under the proposals, at least 75% of the GAV of a REIT must be invested in real estate that generates recurrent rental income at all times, and not more than 25% may be invested in property development projects (including uncompleted units), non-qualified minority-owned properties, financial instruments and other ancillary investments.
  2. Subject also to various other conditions and requirements as set out in the consultation paper.

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Regulator Information

Abbreviation: SFC
Jurisdiction: Hong Kong

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