CITIC Construction Investment: Improving Systems and Tools to Broaden Funding Sources Focus on Steady Allocation and Operational Recovery Opportunities

The Zhitong Finance App learned that CITIC Construction Investment released a research report stating that the supply of C-REITs continues to expand, and capital side construction needs to proceed simultaneously. The experience of the US and Japan shows that easing investment restrictions can help expand the participation of allocation-type capital, active foreign transactions affect marginal pricing, and index instruments broaden allocation channels for institutions and residents. The country can release insurance capital, financial management, and residents' needs in stages, gradually improve social security and pension participation mechanisms and cross-border channels, and guide the ability to accept funds to increase as supply expands; under the scenario where relevant conditions are gradually implemented, the long-term allocation scale is estimated to be about 910 billion yuan. The low return level of inter-agency REITs reflects scarce asset allocation requirements, and current public REITs valuations are already attractive. It is recommended to allocate stable assets such as guaranteed housing, municipal environmental protection, and data centers to build a bottom warehouse, and focus on some warehousing, logistics and highway operation and repair opportunities.

CITIC Construction Investment's main views are as follows:

C-REITs asset supply has entered a new stage, and funding sources and allocation channels are in urgent need of new variables

As of September 2026, the total market value of 89 listed REITs is about 23.5 billion yuan, with assets covering major categories such as commercial real estate, energy, and transportation. Major domestic institutional holders are still concentrated on original shareholders, industrial capital, brokerage firms, and insurance; compared to the US and Japan, which are mainly indirect allocations of funds, asset management, and trust accounts, there is still room for expansion in capital access, product tools, and cross-border channels.

Overseas allocation-type funds

Investment restrictions are relaxed to expand REITs allocation requirements, and countercyclical holdings increase to enhance market acceptance. After US pension shareholding restrictions were relaxed, the share of holdings rose from about 12% in 1993 to about 30% in 1998; the Bank of Japan purchased a total of about 34.1 billion yuan of J-REITs from 2010 to 2022, and increased purchases during the period of market pressure.

Overseas transactional funds

Foreign capital was added to undertake J-REIT expansion, and active transactions affected marginal pricing. From 2004 to 2007, the share of foreign holdings rose from about 10% to 29%; in 2025, the transaction amount accounted for about 52%, which is significantly higher than the share of market value held by about 23% in August of the same year. Foreign capital has both allocation and transactional attributes. Cross-border channels help broaden funding sources and enhance liquidity in the secondary market.

configuration tool

Index products lower the investment threshold for REITs portfolios, and ETFs broaden institutional allocation channels. From 2015 to 2025, the size of J-REITETF increased from 0.34 trillion yen to 2.52 trillion yen, bank holdings increased from 0.19 trillion yen to 1.24 trillion yen, and surpassed the direct holding scale in 2021. Broad-based ETFs carry nearly 90% of the market size, and OTC index funds form channel supplements; domestic priority can be given to cultivating broad-based core products to cover the needs of different investors.

Learning from overseas experience: phased expansion of funding sources, certainty of undervaluation layout and resilience in repair

Short-term insurance investment rules have been improved, public funding participation has been expanded, and index instruments have been developed. In the medium to long term, social security and pension and overseas funding channels have been gradually broadened to guide capital acceptance capacity to increase as supply expands. It is estimated that the long-term C-REITs allocation scale is about 910 billion yuan. The low income level of inter-agency REITs reflects the need to allocate stable income assets. Currently, the average cash distribution rate of public equity REITs is about 4.7%, which has a certain allocation appeal. It is proposed to build a bottom warehouse with definitive assets such as guaranteed housing, municipal environmental protection, and data centers, taking into account the flexibility of warehousing and logistics and the operation and repair of some highways.

risk analysis

1. Risk that approval and issuance progress falls short of expectations; 2. Risk of policy introduction falling short of expectations; 3. Risk of secondary market fluctuations.