On May 25, 2022, the General Office of China’s State Council issued the Opinions on Further Revitalizing Real Assets to Expand Effective Investment (the Opinions), providing clear policy direction on the background, objectives, methods, and policy support for investment of available capital in revitalizing state-owned real estate assets.
Against the backdrop of a complex international environment, ongoing domestic pandemic containment measures, and the priority of sustaining stable economic growth, the release of the Opinions is a significant step towards effectively revitalizing existing real estate assets.
We anticipate that the policy has the potential to jumpstart and invigorate a cycle of new investment into existing assets, improve infrastructure operation and management, broaden societal channels for investment, and expand effective investment. In turn, the strategy should aid in reducing both government debt risks and corporate debt levels.
The Opinions also represent a positive signal for the development of China’s commercial real estate market in the second half of 2022, creating new possibilities for rapid development of infrastructure REITs, promotion of government-subsidized housing programs, participation of private funds in urban renewal and TOD construction, and effective disposal of inefficient state-owned assets.
This report explains the background to the issuance of the Opinions in the context of China's economic growth and financial pressures, evaluates the primary areas of attention and the pathways to revitalizing assets, and presents concluding thoughts on the impact of the policy.