China's first investment fund targeting the public rental housing market while retaining equity ownership will be launched in Shanghai's Hongkou district. It could be converted into a real estate investment trust to trade publicly when the regulatory environment allows, sources said.

The private equity closed-end fund will invest in developed public rental residential properties in the district, one of the city's prime residential communities and which has strong rental demand. The fund will jointly be established by Shanghai Hongkou Public Rental Housing Investment and Administration Co Ltd and three other parties.

Of these parties, Taiping Asset Management Co Ltd, a subsidiary of China Taiping Insurance Group Co Ltd, is the lead private investor in the fund. The two others are UBS Global Asset Management (China) Ltd and UBS SDIC Fund Management Co Ltd, which are the fund's investment manager and adviser respectively.