The Chinese public REITs market has now been developing for over five years. Starting from just a handful of initial products, it has grown to host 86 listed offerings with a total scale exceeding 230 billion yuan, emerging as one of the world's most prominent and fastest-growing emerging REITs markets. Alongside Japan and Singapore, it forms one of Asia's three core REITs markets. From early tentative steps to today's scaled development, Chinese public REITs are transitioning from a peripheral category into the mainstream view for asset allocation.

A more significant milestone is the listing of the first batch of consumer REITs in March 2024 and the debut of the first commercial real estate REITs in June 2026. This marks the expansion of the REITs asset landscape from infrastructure into commercial real estate, providing investors with a more public, transparent, and convenient channel for investing in and allocating high-quality commercial real estate assets. It also lays a solid foundation for the public REITs market to serve the real economy through financial services.

From the perspectives of reviewing the past and looking to the future, the long-term value and investment timing for commercial assets are becoming increasingly clear.

Consumer REITs: A Report Card on History

Looking back at 2025, the performance of consumer REITs was noteworthy. Their secondary market price gains for the year approached 30%, significantly outperforming other sectors and becoming a focal point for market attention.

This performance was driven by a dual force of policy and market dynamics.

On the policy front, the 2025 Government Work Report explicitly supported the issuance of REITs in areas like consumption, culture, and tourism. The "Action Plan to Boost Consumption" further reinforced this policy signal. Document No. 782 of 2025 significantly optimized the expansion mechanism: simplifying application procedures, broadening the scope of eligible assets, and supporting cross-regional integration. These supportive policy tailwinds provided solid fundamental backing for the sector.

On the market front, in a low-interest-rate environment, consumer REITs with their mandatory dividend features became sought-after assets. This reflects investors' strong appetite for cash flow—as yields on bank wealth management products continue to decline and equity market volatility increases, REITs products with mandatory dividend mechanisms are filling a gap in asset allocation.

2026 First-Quarter Report: Resilience on Display

According to periodic reports disclosed by various consumer REITs in late April 2026, the sector's operations have remained generally stable.

Data shows that the cash flow collection capability of consumer REITs remains robust. Meanwhile, different sub-sectors have shown bright spots: shopping malls in core commercial districts, leveraging their locational advantages and brand clustering effects, maintained high occupancy rates by the end of Q1 2026, with rental competitiveness becoming prominent. Outlet projects, with their unique discount retail positioning, demonstrated strong consumption resilience during the economic adjustment period, with some projects achieving record-high occupancy rates.

This resilience, at its core, represents a vote of confidence and trust in the potential of commercial real estate assets to realize their value through ongoing operational enhancements, scene renovations, and brand upgrades in an era of stock competition. Large-scale, high-quality commercial real estate assets have undoubtedly become one of the core assets within China's public REITs market.

A New Milestone: Debut of the First Commercial Real Estate REITs

Against this backdrop, the successful listing of the first batch of commercial real estate REITs on the Shanghai Stock Exchange undoubtedly marks another significant development moment for the public REITs market.

The four products in this listing raised a combined total of over 20 billion yuan. Their underlying assets cover mature commercial formats such as retail and office properties, located in core areas of cities including Beijing, Shanghai, Zhengzhou, Xi'an, and Harbin.

The significance of this event extends far beyond the issuance of a few new products.

From an asset category perspective, the launch of commercial real estate REITs signifies a further extension of the REITs asset landscape into the broader realm of "commercial real estate," with asset classes like hotels and commercial-office complexes expected to further enrich the scope of issuable assets.

From a market expansion viewpoint, the fundraising scale of this first batch of commercial real estate REITs has already surpassed that of the first batch of consumer REITs in 2023. Participants include both leading local state-owned enterprises and top private firms in the industry. In terms of scale, the full-scale implementation of commercial real estate REITs is expected to connect with and leverage a stock commercial asset market exceeding 40 trillion yuan.

From an investment choice standpoint, the enrichment of asset categories provides investors with more diverse products, featuring more varied cash flow characteristics and risk-return profiles. Investors can now conduct more targeted portfolio allocation based on their own risk preferences and return expectations.

Recent Market Correction: Short-Term Volatility or Long-Term Opportunity?

It is worth noting that over the past month, public REITs products have experienced a degree of correction in the secondary market, with some products showing more pronounced declines. This short-term volatility is related to the overall market environment and also reflects investors repricing expectations regarding macroeconomic factors and interest rate levels. However, from a long-term perspective, this correction may present a favorable timing opportunity for strategic allocation.

First, from a valuation standpoint, the adjusted valuations of public REITs products and their underlying commercial assets are returning to more attractive levels.

Second, from a fundamental perspective, the short-to-medium-term divergence between public REITs product prices and the operational performance of their underlying assets reflects market sentiment changes, thereby creating value for investments based on fundamentals.

Third, from a policy environment perspective, long-term institutional safeguards such as the optimization of expansion mechanisms, the broadening of the asset landscape, and supportive regulatory guidance are becoming more refined. As the transformation and upgrading towards a consumption-oriented society progresses, the commercial asset market is expected to continue improving during the "15th Five-Year Plan" period. As of the writing of this report, the first four "CSI REITs Total Return Index Funds" launched on June 17, 2026, have completed their fundraising phases, also marking the official entry of public REITs into the "era of index investing."

Of course, the long-term allocation value and favorable timing window for commercial assets do not imply that one can "make money effortlessly." For investors, discerning high-quality targets in a complex market may be a more crucial task at present.

Reflections on Long-Term Value

When considering the allocation of commercial assets through the public REITs market, it is worthwhile to revisit the three core logics of value investing in public REITs:

First, clarify the purpose of allocation, advancing from "short-term capital gains" to "long-term value anchoring." As an independent major asset class, the core value of public REITs lies in providing stable cash flow and optimizing asset allocation structure, not in serving as a tool for short-term speculation. When short-term price fluctuations occur in the market, the mandatory dividend mechanisms and counter-cyclical resilience of high-quality underlying commercial assets instead highlight their advantages. Guiding the market back from a "speculator mentality" to the "essence of investing" is key to truly sharing in the long-term dividends of China's economic structural transformation.

Second, align with macro trends, deeply grasping the scarcity value of high-dividend assets in a low-interest-rate environment. Currently, with China's interest rate center on a long-term downward trajectory, high-quality instruments in the entire market that offer mandatory dividend features backed by underlying physical assets are extremely scarce. Simultaneously, the continued efforts of policies supporting new urbanization and consumption, as well as the "Action Plan to Boost Consumption," are fundamentally repairing and reshaping the intrinsic value of commercial real estate. The interplay between the certainty of macro policies and the stability of underlying cash flows is providing the firmest foundation for capital allocation across cycles.

Third, view the expansion mechanism rationally, embracing the modern, healthy REITs ecosystem of "big water, big fish." Expansion and follow-on offerings are by no means market "funding drains"; they are inherent to the REITs model as a modern corporate growth mechanism. Through the continuous injection of high-quality new assets, public REITs are evolving from static "asset packages" into "living assets" with endogenous growth momentum. As the market scale continues to expand, the core functions of public REITs in supporting the revitalization of existing assets, serving the development of the real economy, and realizing China's independent pricing power for commercial real estate will naturally materialize.

Conclusion

In just over five years, China's public REITs have grown from a pilot initiative into one of Asia's largest REITs markets, moving from the periphery to the mainstream. At this juncture, the development of consumer REITs and the successful listing of the first commercial real estate REITs have opened new horizons for the public REITs market. In the long run, the market correction provides a more attractive timing window for long-term investment.

For investors, once confidence is established, long-term value investors may not need to overly fret about the gains and losses of short-term volatility. Instead, they should focus more on asset allocation, the quality of underlying assets, and long-term development trends, thereby arriving at their own answers and choices.