Recently, there has been a surge in withdrawal applications for Real Estate Investment Trusts (REITs) in mainland China, leading to a phenomenon known as the “withdrawal tide.” However, the Hong Kong Securities and Futures Commission has emphasized the importance of implementing mutual access between Hong Kong and mainland China REITs as a top priority. The purpose of REITs mutual access is not to channel high-quality, scarce, and stable cash-flow assets to Hong Kong, but rather to bring assets that have already undergone securitization and require continuous funding to a larger pool of capital. It serves as an extension of the balance sheets of local governments and real estate developers in China, rather than an upgrade in wealth management for Hong Kong citizens. On the contrary, it poses significantly increased investment risks.
As a resident of Hong Kong who holds Mandatory Provident Fund (MPF), has invested in bank wealth management products, or has indirectly invested in real estate-related funds, one may ponder a question: when a certain type of asset becomes increasingly difficult to sell in mainland China, will it be pushed towards other markets?
In recent years, many Hong Kong investors have noticed a growing frequency of real estate, infrastructure, and logistics-related assets from mainland China in their financial products and fund allocations, packaged in an increasingly international manner.
Against this backdrop, a mainland China real estate-related investment product — REITs — may soon make its way into Hong Kong.
According to data released by the Shanghai Stock Exchange, public real estate investment trust funds (public REITs) refer to funds that are publicly raised from investors to form fund assets through special purpose vehicles such as asset-backed securities holding real estate projects. Fund managers actively manage and operate the aforementioned real estate projects and distribute the majority of the generated income to investors, making them standardized financial products. Chinese public REITs are required to be listed and traded on stock exchanges.
Meanwhile, Hong Kong regulatory authorities have continuously signaled the importance of implementing REITs mutual access as soon as possible.
In official statements, REITs mutual access is seen as a natural progression of the regulatory framework.
The China Securities Regulatory Commission announced as early as April 2024 the inclusion of REITs in the Shanghai-Hong Kong Stock Connect. The Hong Kong Securities and Futures Commission subsequently stated several times that this is an important step towards strengthening Hong Kong’s status as an international financial center and enriching its range of investment products.
According to a report by Radio Television Hong Kong on January 30, Ms. Yang Huiming, Acting Head of Investment Products at the Hong Kong Securities and Futures Commission, emphasized that the expeditious implementation of REITs mutual access remains the commission’s top priority. She highlighted that regulatory bodies are closely collaborating with relevant mainland China departments and will release more details once preparations are completed.
She mentioned that in recent years, mainland China REITs have become the fastest-growing market in the Asia-Pacific region, with 78 listed REITs and a total market value exceeding 214 billion yuan by the end of 2025. Providing examples for more foreign investors to participate in the mainland China REITs market and helping boost the development momentum and attractiveness of REITs mutual access.
Thus, according to official narratives, the mutual access of REITs between Hong Kong and mainland China signifies enriched assets, freer capital flow, and a more internationalized market.
However, just when the Hong Kong Securities and Futures Commission expressed the need to “implement mutual access as soon as possible,” the mainland China REITs market is currently undergoing a wave of withdrawals.
In January 2026, a rare wave of public REITs withdrawals emerged in mainland China. Leading institutions such as Vanke, Construction Bank, Sino-Ocean Group, and Yango Group successively announced the voluntary withdrawal of REITs issuance applications that had been under preparation for some time.
Reported by China Real Estate News on January 29, most of these projects were concentrated for application in early 2024 when market sentiments were bullish, but after nearly two years of waiting, they collectively terminated. This phenomenon reflects profound changes in the market environment and regulatory logic.
“This wave of collective withdrawals is actually a response to the current market environment,” according to a REITs fund manager quoted by official media. In stark contrast to the bullish market conditions at the beginning of 2024, the current secondary market performance of REITs has been weak, with pressure on asset yields, declining investor subscription willingness, leading to severe pricing challenges for new products.
These projects are not marginal assets; some are core city office buildings, some are warehouses and logistics facilities in Shenzhen, and some are affordable rental housing. They were previously seen as standard REITs targets with “stable cash flow suitable for long-term holding.”
The changes in the market environment are more directly reflected in numbers. According to data from financial data service provider Wind, as of the fourth quarter of 2025, 77 disclosed public REITs achieved total operating income of 5.913 billion yuan, with only a net profit of 526 million yuan, a 42.83% decrease from the previous quarter. In the secondary market, over 70% of REITs securities recorded declines in December.
A notable point that surfaced in official media reports but may easily be overlooked is the judgment that even if the underlying assets are of high quality, investors will demand higher risk premiums due to credit risks.
This implies that amidst the ongoing real estate crisis, REITs are no longer viewed as “risk isolators” but are once again evaluated within the frameworks of credit and cash flow.
In such an environment, the price negotiation between issuers and investors has broken down, leading withdrawals to become a rational choice.
Placing these two strands side by side reveals an intriguing fact.
On one hand, the mainland China REITs market is tightening valuations, raising thresholds, and seeing widespread withdrawals, actively undergoing stress testing.
On the other hand, Hong Kong is facilitating cross-border channels, with expectations to expand the market and attract issuers.
The question may not lie in REITs themselves but in the scenario where one market is increasing risk pricing while the other market anticipates integration. Does the risk truly disappear in this dynamic?
From a structural perspective, mutual access does not automatically change the cash flow structure of underlying assets and cannot eliminate the practical situations of financial constraints for local governments, low credit for real estate developers, and long project operation cycles in mainland China. What it alters more is the composition of investors and distribution of risks. Risks do not disappear but are transferred to a different pool.
REITs mutual access is not inherently bearish, nor does it necessarily indicate systemic risks. For Hong Kong, diversification of products and increased activity in the local market are short-term benefits that can be observed.
However, in the current context of mainland China’s REITs market undergoing withdrawals, valuation reconstruction, and regulatory upgrades, several variables still require investors to carefully examine: whether the asset selection standards for cross-border REITs will become stricter or looser, can the relationship between credit credibility and asset cash flow be fully identified, and when mainland Chinese investors choose to exit, whether internationalization is merely another form of risk redistribution?
These questions currently lack standard answers. Investors should contemplate where the risks flow as participants enter or exit the market.