Deloitte, REIT call to ease restrictions

The Hong Kong administration should further ease rules and tax levies on real estate investment trusts to propel the market to grow in a weakening economy, said Deloitte China and the city's REIT leaders.

Among the suggestions proposed in a joint report, Deloitte and the Hong Kong REITS Association advocate the abolition of the two-year restriction on the sale of properties to improve the timing of asset sales.

All stamp duties of injecting properties in the REITs should be cut to 0.2 percent or even zero from as high as 4.25 percent, according to the report.

On the other hand, the authorities should defer the stamp duty levy of property injection to after the listing, instead of asking for a large upfront payment regardless of the outcome.

Deloitte and the association urged the administration to allow REIT companies to introduce a corporate structure to facilitate their financing.

Deloitte China real estate industry leader Philip Law Yuen-kong said the easing measures may unlock growth potential to help keep up with other developed markets.

George Hongchoy, founding president and chairman of HKREITA and chief executive of Link REIT (0823), pointed out that companies need to pay stamp duties nearly equivalent to their full-year income when injecting the property into the trust, making the REIT setup more akin to a fine.

Hubert Chak, founding president of HKREITA and chief executive of SF REIT (2191), hopes the administration adopts the advice to reduce costs for companies in establishing REIT.

Staff reporter