Chinese insurers to splurge $73bn on real estate
Chinese insurers could splash out as much as $73bn (£48.4bn) on the global real estate market by 2019, new research shows, as companies look to protect themselves from volatile equity markets and take advantage of relaxed rules on overseas investment.
According to Cushman & Wakefield, top insurance companies in China had just 0.8 per cent of their $1.65 trillion assets under management invested in real estate in 2014, with just under half of their holdings, or $6bn, overseas.
This is well below the 30 per cent allocation permitted by the Chinese insurance regulator – although this is capped at 15 per cent overseas.
The real estate adviser predicts total investment on global property will rise sharply over the next four years to $79bn by 2019 and $154bn by 2024, as companies reduce their reliance on their domestic portfolios and step up their expansion overseas.
“Over recent years, investment activity has increased. This can in part be attributed to the liberalisation of foreign investment, which allowed top players to accelerate real estate acquisitions, as well as growth in the value of assets under management,” Cushman & Wakefield’s research director Nigel Almond said.
In 2009, Chinese regulators relaxed investment rules that previously banned insurers from owning properties that were not for self-use. Last year, it made further reforms, with companies allowed to invest in 45 countries overseas.
China’s second largest player, Ping An, has already made two major acquisitions in the UK after snapping up the Lloyds Building in the City in 2013 for £260m, followed by its purchase of Tower Place last year for £327m.
The country’s biggest insurer, China Life Insurance, paid £795m last year to buy a 70 per cent stake in one of Canary Wharf’s biggest towers, 10 Upper Bank Street.