Property - China/Hong Kong: More clarity on commercial land use renewal to facilitate C-REITs issuance

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Property - China/Hong Kong: More clarity on commercial land use renewal to facilitate C-REITs issuance

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Property - China/Hong Kong

More clarity on commercial land use

renewal to facilitate C-REITs issuance

Industry Overview

Net positive development in commercial land use renewal 22 May 2026

The Central government has prioritized improving regulations governing the renewal of Equity

industrial and commercial land use rights during the 2026–30 Five-Year Plan. With a Hong Kong/China

large portion of commercial land granted in the 1990s (typically with 40–50 year terms) Real Estate/Property

approaching expiry, clearer renewal rules could have meaningful implications for Karl Choi, CFA >>

industrial and commercial landlords. On the positive side, the historical lack of renewal Research Analyst

standardization has been a key deterrent for international property investors. Greater Merrill+852 3508Lynch3108(Hong Kong)

clarity and visibility on renewal terms should support asset valuations and facilitate karl.choi@bofa.com

secondary transactions. In addition, current valuation practices typically only capitalize Fan Tso, CFA >>

Research Analyst

cash flows up to lease expiry, effectively capping valuations for older assets and limiting Merrill Lynch (Hong Kong)

their eligibility for C-REIT injections. There may also be a net boost to property +852 3508 2875

fan.tso@bofa.com

companies’ bank value. However, landlords opting for early renewal may face unexpected

Eric Du >>

cash outflows (by investors), and initial indications from the Guangzhou pilot suggest Research Analyst

renewal premiums could be higher than market expectations (more below). Overall, we Merrill Lynch (Hong Kong) +852 3508 3329