The strength of the Taiwan dollar is encouraging the country’s second largest insurance company Fubon Life to invest in European real estate.
Asked how the local currency affected the insurer’s programme of large-scale purchases of overseas property, chief financial officer Howard Lin told IP Real Estate it made investments in Europe “cheaper and more justified.”
The new Taiwan dollar is the only currency to have gained against the US dollar in 2015 after declining 8.3% over the preceding two years.
Meanwhile, Fubon Life Insurance said that it is on track to meet its target of buying up to $3bn (€2.7bn) of overseas property.
After the recent acquisition of the landmark Madame Tussauds building in London, it has up to $2bn left to invest in within the next two to three years.
“Our plan was to invest as much as $3bn in overseas real estate and we have achieved one-third of the target amount within a year,” Lin said.
As of the end of the first quarter, Fubon Life, a member of Fubon Financial Holdings, has invested as much as $3.82bn in real estate, including $520m in two office properties in London.
In May this year, Fubon signed the agreement to purchase Madame Tussauds London for $523m. The life insurer said it expects to close the deal in the third quarter of 2015.
Lin did not say how much the company might invest or where it might invest in the second half of this year, except that it would “continue to look for new investments in Europe and UK.”
Some of the reasons, Fubon pointed out, it has been favouring UK over other countries are its large trading volume, good yield and a friendly tax and regulatory regime.
Currently, the real estate allocation is about 4% of Fubon’s total asset size and it expects to double its real estate portfolio by increasing its allocation to overseas property to 6-7%.
Impending rate hikes, low domestic yields on real estate, and loosening of policies by the authorities have encouraged Taiwanese insurers to go overseas, making insurers like Fubon and its bigger rival Cathay Life the biggest institutional investors in European property in the past year.
Incidentally, Fubon Life Insurance said last month that it has purchased 48% of Hyundai Life Insurance, the life insurance arm of the Korean conglomerate Hyundai Group, taking a 48% stake in the firm for $196m.