GLOBAL – Chinese insurance funds are planning to invest more than $14bn (€10.5bn) in real estate beyond their borders, according to CBRE.
In a recent study, CBRE found that Chinese insurance funds were looking at locations with "high transparency", including the UK, the US, Canada, Singapore, Hong Kong and Australia.
It said this focus on foreign property had been triggered by a "lack of prime real estate in the most important Chinese metropolis", as well as the short-term risk of excess supply in China's second and third-tier markets.
The company added that Chinese institutional investors were "rather new" to real estate investing.
In 2012, the total assets managed by Chinese insurers amounted to $1.2trn.
A change in regulations now allows them to invest as much as 15% of their assets in properties they are not using themselves, CBRE noted.
Judging by past investment activities, as well as an assumed 80:20 ratio between domestic and foreign real estate investments, CBRE is expecting $14.4bn to flow from Chinese insurers onto international real estate markets in the coming months.
The legal framework limits these investments to "established retail and office properties" with "stable rental income in central locations of the most important cities in the 25 developed markets", CBRE said.
Andreas Ridder, managing director at CBRE Austria, said he was convinced the larger players would "pave the way", and, should they be successful, that others would follow.
Frank Chen, head of research at CBRE China, added: "Considering the rapidly growing purchasing power generated by the continuous appreciation of the RMB, this is the perfect point in time to invest Chinese capital in foreign markets."
