Chinese insurers to control €70b of foreign real estate by 2019

The Chinese insurance industry is expected to grow its investment in overseas real estate to $73 bn (€70 bn) by 2019, according to Cushman & Wakefield.

The increase is being stimulated by a deregulation programme introduced by the Chinese government over the last six years.

Up until late 2009, Chinese insurance companies could only own their own buildings and were barred from real estate investment. The restriction was eased in October of that year to allow direct property investment in the Chinese market. Further deregulations followed and insurers are now allowed to allocate 30% of total assets to real estate, with 15% in overseas property.

Cushman & Wakefield expects an ever-increasing allocation to real estate outside of China, albeit from a low base. Chinese insurers had total real estate holdings of $13.4 bn at end-2014, just 0.8% of the industry's total assets under management, and well below the permitted allocation of 30%.

Nigel Almond, research director at Cushman & Wakefield, said: 'For the largest five Chinese insurers, total allocations remain low and no greater than 2%, with some below 1%. 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.'

In the next five years, allocations are anticipated to increase from their current levels to near 5%, according to Cushman & Wakefield. This is equivalent to an additional $73 bn of investment.