Since the onset of 2025, the public Real Estate Investment Trusts (REITs) market has exhibited significant growth in the secondary trading market, attracting the attention of various investors and financial analystsAs of February 14, the CSI REITs All Return Index has recorded a continuous rise over four trading weeks, with an impressive year-to-date increase of 8.6%. This performance has notably outpaced mainstream broad-based indices during the same periodOn February 12, the index reached a two-year high at 1064.6 points, reflecting robust investor sentiment.

Data compiled by Wind reports that by mid-February 2025, there were a total of 60 publicly-traded REITs, achieving a market capitalization of approximately 175.79 billion yuanThis marks a significant increase compared to the 162.2 billion yuan recorded on January 20, indicating a growth of 13.5 billion yuan over just four weeksMore impressively, compared to the start of 2024 where the total market value was only 81.1 billion yuan, this signifies an astounding growth of 116.6%.

Xu Chenglong, a fund manager at CITIC Construction Investment, highlighted that the dividend yield of public REITs typically surpasses that of government bondsConsequently, during periods of falling interest rates, they present a compelling investment option for those seeking higher and more predictable returnsFurthermore, Wan Yi, Deputy Director of Infrastructure Investment Management at Harvest Fund, emphasized that long-term capital participation helps manage the market capitalization of public REITs, while also stabilizing market fluctuationsThis trend has paved the way for enhanced market liquidity and growth.

The rally in the public REITs market can be traced back to several market dynamics and supportive policiesSince August 2024, there has been a significant acceleration in new issuance, allowing for the introduction of projects related to artificial intelligence, data centers, smart cities, and innovative technology park REITs

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This regulatory environment aims to activate existing assets and explore diverse financial solutions for retirement planning through the issuance of asset-backed securities and REITs focused on senior living facilities.

Many in the financial sector, including representatives from Bosera Fund, believe that the increasing popularity of public REITs is largely due to their risk-return characteristics, which lie between stocks and bonds, while maintaining a low correlation with traditional assetsThis allows for a diversified asset allocation strategy for investorsThe high dividend payout associated with REITs is particularly attractive to institutional investors, especially in a climate where high-yield assets are growing scarce.

As prices continue to rise significantly in the secondary market, the primary market for public REITs is also witnessing astonishing subscription ratesFor instance, on February 12, the Huatai-Pineapple Nine States Pharmaceutical REIT announced a subscription confirmation ratio with public investors achieving a staggering oversubscription rate of 1192 times, setting a historical record for public REITs subscriptionsOther recent subscription figures include an impressive 813 times for the Guotai Junan Jinan Energy and Heating REIT, attracting nearly 130 billion yuan in funds, and 407 times for the E Fund Huawai Market REIT.

As per Huabao Fund's analysis, out of the 60 listed REITs, 52 have seen their prices increase on their first trading day, revealing a high success rate of approximately 90% for new listingsNotably, seven REITs hit the daily limit increase on their debut (30%), while 19 saw their prices rise by more than 10%. However, it is important to note that despite high success rates, not all REITs are guaranteed success; four of the 60 experienced price drops on their first trading day, with declines exceeding 6% in the worst cases.

As the secondary market continues to experience high premiums, some fund companies have cautioned investors about the associated dilution of dividend yields

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