Chinese insurers could spend about $14.4 billion on overseas commercial real estate, aided by a stronger local currency and easier regulations amid a limited supply of prime properties at home, CBRE Group Inc. said.
The insurers are seeking high-quality office investments in international gateway cities such as London, New York and Toronto, according to an e-mailed release from CBRE. Asian markets with similar cultural backgrounds such as Singapore, Hong Kong and Malaysia will also be major destinations, it said.
China last year made it easier for insurers to buy real estate and other assets outside the country, a move that was expected to help them improve their investment yields. The Chinese yuan has risen 6.3 percent against the British pound and 8.2 percent against the Canadian dollar this year.
“Most of the Chinese investors with sufficient capital are now facing limited domestic investment channels,” Frank Chen, head of research for China at CBRE, said in the release. “Factor in the escalating purchasing power enabled by the continuous appreciation of the renminbi and now is the ideal time for Chinese capital to enter the overseas market.”
Chinese insurers had total assets of $1.2 trillion in 2012 and new regulations allow these institutions to invest as much as 15 percent of assets in “non-self-use” real estate, CBRE said. Most insurance funds globally have about a 6 percent allocation to real estate, with 20 percent of that in offshore markets, CBRE said.
Ping An Insurance Group Co., China’s second-largest life insurer, in July agreed to buy the Lloyd’s of London building from a Commerz Real AG-managed fund, two people with knowledge of the transaction said.