Analysis of the Impact of Extended Public Rental Housing Tax Incentives on the Investment Value of Real Estate Enterprises and Affordable Housing REITs

Based on the above in-depth research, I have prepared a systematic and comprehensive analysis report for you.

On January 16, 2026, the Ministry of Finance and the State Taxation Administration issued Announcement No. 4 of 2026, extending the implementation of public rental housing tax incentives, with an implementation period of

[1]. This policy extension sends a clear signal of the country’s continuous support for affordable housing construction, providing stable policy expectations for relevant enterprises and investors.

This incentive policy covers

, forming a comprehensive tax reduction and exemption system[1][2]:

Tax Type	Eligible Entities	Core Content
Urban Land Use Tax	Public rental housing construction and operation entities	Exemption for land used during construction and after completion; Exemption for land used for co-constructed public rental housing based on area proportion
Stamp Duty	Operation and management entities, both parties to the lease	Exemption for construction and management; Exemption for purchasing housing as public rental housing; Exemption for rental agreements
Deed Tax	Operation and management entities	Exemption for purchasing housing as public rental housing
Land Value-Added Tax	Enterprises, public institutions, social organizations	Exemption for the portion of value increment not exceeding 20% when transferring old housing as public rental housing sources
Property Tax	Operation and management entities	Exemption for public rental housing
Value-Added Tax (VAT)	Operation and management entities	Exemption for rental income from operating public rental housing
Corporate Income Tax / Individual Income Tax	Enterprises, individuals	Pre-tax deduction for public welfare donations of housing as public rental housing

This multi-level, full-chain tax incentive system significantly reduces the full-life-cycle tax burden of public rental housing from construction, operation to exit.

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The extension of the tax incentive policy brings

to real estate enterprises. According to estimates, the exemption of major taxes including urban land use tax, property tax, and VAT can save for public rental housing projects[3].

For real estate enterprises developing affordable rental housing projects:

• Optimized Land Costs
  : The exemption of urban land use tax directly reduces one of the largest tax expenditure items during project holding
• Reduced Transaction Frictions
  : The exemption of deed tax and stamp tax reduces friction costs in asset acquisition and transfer
• Improved Operating Cash Flow
  : The exemption of property tax and VAT increases the net cash flow during project operation

Liu Shui, Director of Enterprise Research at China Index Academy, pointed out that public REITs have transformed from an “optional tool” to a “strategic necessity” for real estate enterprises[3]. The tax incentive policy and the REITs mechanism form a synergistic effect, supporting real estate enterprises in achieving strategic transformation:

• Rapidly recapture funds locked in assets such as affordable rental housing and industrial parks
• Reduce asset-liability ratio by
  2-3 percentage points
  through asset deconsolidation
• REITs financing costs are 2-3 percentage points lower than traditional development loans, reducing reliance on high-interest debt

• Transform from a “heavy asset holder” to a role of “asset operation + fund management”
• Separate light and heavy assets to obtain management fees and dividend income
• Build a complete closed loop of “development and cultivation — mature listing — fund recapture — reinvestment”

According to statistics from CRIC Research, as of October 2025, among the 13 public REITs products listed and filed by real estate enterprises,

, accounting for more than together with consumer infrastructure REITs[3]. This asset preference reflects:

1. Clear Policy Dividends
   : Affordable rental housing enjoys policy guarantees for affordable housing, with separate review and priority recommendation
2. Stable Cash Flow
   : Occupancy rate exceeds 90% in core cities, and rent collection rate is over 99%
3. Adequate Reserves
   : Transformed from existing residential or commercial-office properties, with good ownership and operation foundations

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Against the backdrop of weak macroeconomic recovery, affordable housing REITs have demonstrated

. Core operational data in the second half of 2025 performed impressively[3][4]:

REITs Product	Occupancy Rate	Rent Collection Rate	Dividend Yield
CICC Xiamen Anju REIT	99%+	99%+	3.0%-3.5%
Hongtu Innovation Shenzhen Anju REIT	95%+	99%+	2.8%-3.2%
China Asset Beijing Affordable Housing REIT	93%+	99%+	3.0%-3.3%
China Resources Youchao REIT	92%+	98.5%+	3.1%-3.4%

• Policy-based rental housing has higher stability than market-oriented projects
• Government-guided prices provide downside protection
• Strong anti-cyclical capability, with dividend yield stably in the range of
  2.8%-3.5%

The extension of the tax incentive policy directly enhances the

of affordable housing REITs:

1. Cost-Side Optimization
   : Exemption of property tax and VAT directly increases distributable cash flow
2. Yield Improvement
   : The reduction in comprehensive tax burden is expected to increase the project’s net yield by
   20-30 basis points
3. Valuation Premium
   : Stable and sustainable dividend-paying capability earns a market valuation premium

In 2025, the secondary market of public REITs generally showed a “rise first, then fall” trend, but affordable housing REITs performed steadily with their

characteristics[5][6]:

• Consumer REITs recorded an average annual increase of over 30%
• Affordable rental housing REITs demonstrated prominent anti-drop performance, showing defensive attributes
• Achieved four consecutive positive openings in early 2026, with market sentiment recovering

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After 5 years of development, China’s REITs market has grown into the

[3][5]:

Indicator	2024	2025	Year-on-Year Growth
Newly Issued Products	-	20	-
Completed Follow-On Offerings	-	5	-
Funds Raised	-	47.335 billion yuan	-
Total Listed Products	-	79	-
Total Issuance Scale	150 billion yuan	210 billion yuan	40%

The Research Department of CICC predicts that the total number of public REITs issuances will reach

in the next 4 years, with a total market value of , representing an increase of compared to 2025[5].

1. Continuous Policy Support
   : Document No. 782 supports regular issuances, and the pilot program for commercial real estate REITs has been launched
2. Expansion of Asset Categories
   : New assets such as data centers, cultural tourism, and elderly care are accelerating their listing
3. Regularization of Follow-On Offerings
   : Supports cross-regional asset integration to achieve economies of scale

Current public REITs holders show significant

, accounting for more than [6]:

• Original rights holders and their affiliated parties: Hold over half of the positions, acting as cornerstone investors
• Other institutions: Brokerage proprietary trading, insurance funds, trusts, industrial capital, bank wealth management, private equity funds

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Based on the views of institutions such as CICC and China Merchants Fund, the following investment themes are recommended[4][5][6]:

• Policy-based affordable rental housing: Rigid demand, policy guarantee, prominent defensive attributes
• Municipal environmental protection projects: High operational stability
• Core consumer assets: Significant weak-cycle attributes

• Digital infrastructure: Data centers directly benefit from the development of the digital economy
• Warehousing and logistics: Demand recovery brings marginal performance improvement
• Affordable rental housing: Continuous increase in policy support

• Focus on REITs platforms with strong follow-on offering capabilities
• Commercial real estate pilot projects achieve economies of scale through asset injection

Evaluation Dimension	Score	Core Logic
Reducing Operating Costs	85/100	Full coverage of 7 major tax types, saving 15%-35% of costs
Enhancing Investment Returns	78/100	Dividend yield of 2.8%-3.5% with improved net yield
Enhancing Asset Liquidity	72/100	REITs provide standardized exit channels
Improving Financial Structure	68/100	Reduce asset-liability ratio by 2-3 percentage points
Supporting Strategic Transformation	90/100	Build a closed loop of “investment, financing, operation, and exit” to promote light-asset transformation

1. Interest Rate Fluctuation Risk
   : Further decline in long-term interest rates supports valuations, but unexpected fluctuations may affect long-duration projects
2. Policy Implementation Risk
   : Need to pay attention to local implementation rules and compliance requirements
3. Market Competition Risk
   : Market-oriented affordable rental housing projects face pressure from intensified competition
4. Operational Quality Risk
   : Indicators such as project occupancy rate and rent collection rate may fluctuate

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The extension of the public rental housing tax incentive policy (effective until the end of 2027) has

on real estate enterprises and affordable housing REITs:

1. For Real Estate Enterprises
   : The policy dividends resonate with the REITs mechanism, supporting enterprises to transform from development and sales to asset operation, building a complete closed loop of “investment, financing, operation, and exit”. REITs have obvious financing cost advantages (2-3 percentage points lower)
2. For Affordable Housing REITs
   : Tax incentives directly boost the project’s intrinsic value by about 15%-35%. Coupled with stable operational fundamentals (occupancy rate of 95%+, rent collection rate of 99%+), the dividend yield (2.8%-3.5%) has strong sustainability and competitiveness
3. For the Capital Market
   : As a “quasi-fixed-income high-dividend asset”, affordable housing REITs have prominent allocation value against the backdrop of interest rate cuts and asset shortage, with continuous optimization of the investor structure

• Institutional Investors
  : Include affordable housing REITs as an important part of asset allocation, and prioritize projects with strong policy attributes and stable operations
• Individual Investors
  : Focus on affordable housing REITs products with good liquidity and stable dividends, as the “ballast” of a conservative investment portfolio
• Real Estate Enterprises
  : Actively seize the policy window period, accelerate the REITs process of affordable rental housing projects, and promote strategic transformation

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[1] Ministry of Finance, State Taxation Administration. Announcement on Extending the Implementation of Public Rental Housing Tax Incentive Policy. (https://szs.mof.gov.cn/zhengcefabu/202601/t20260116_3982019.htm)

[2] Jiemian News. Ministry of Finance and State Taxation Administration: Extend the Implementation of Public Rental Housing Tax Incentive Policy. (https://www.jiemian.com/article/13895985.html)

[3] Jiemian News. Scale Exceeds 210 Billion Yuan, Public REITs Become a Key Driver for Real Estate Enterprise Transformation. (https://finance.sina.com.cn/jjxw/2026-01-11/doc-inhfxzzh8146028.shtml)

[4] CICC Research Department. CICC 2026 Outlook | REITs: Navigating New Waves, Unveiling Value. (https://finance.sina.com.cn/roll/2026-01-09/doc-inhfsfzt4610849.shtml)

[5] China Fund News. Public REITs Welcome a “Strong Start”! (https://www.163.com/dy/article/KJ0ALL550530NLC9.html)

[6] Tianjin Daily. Public REITs Head Toward a Trillion-Yuan Scale. (https://finance.sina.com.cn/jjxw/2026-01-15/doc-inhhiqkf3567914.shtml)