Chinese insurers continue global RE push

In the face of government sanctioned capital curbs and regulatory uncertainty Chinese insurers are deploying more money into overseas real estate than ever, according to data from Real Capital Analytics.

Chinese insurance companies are investing in global real estate at record levels despite strong headwinds, said data from property research company Real Capital Analytics revealed.

According to data seen by PERE, China insurance capital investment in H1 grew 5 percent to reach $4.95 billion in the first half of this year. This is after record high volumes at the end of last year, the research firm added.

“Many investors will look abroad to diversify from a growing pool of domestic wealth and they will be drawn to global real estate markets,” said Petra Blazkova, senior director of analytics, APAC at Real Capital Analytics.

Insurers in China are permitted to allocate 30 percent of their portfolios to real estate investments, and Chinese insurers’ real estate holdings account for just 1 percent of their total allocations in 2016, compared to an average of 10 percent worldwide, a report from CBRE released on Tuesday revealed.

“It is hard to believe that Chinese insurance capital outflows into global real estate might halt, despite today’s headwinds,” added Blazkova.

The substantial hurdles facing Chinese insurance firms include continued controls on capital outflows to stabilize the yuan and upheaval at the industry regulator, the China Insurance Regulatory Commission.

The regulator said in April that its head, Xiang Junbo, was being investigated for suspected disciplinary violations.

According to a Chinese insurance executive, the likely replacement is Yang Xiaochao, secretary general of the Central Commission for Discipline Inspection (CCDI) and a member of the Politburo Standing Committee, the country's top leadership body.

A new regulator will face the difficult task of policing an industry that has seen rapid expansion in recent years, with total assets growing by around 20 percent per annum, said CBRE data showed. The Chinese insurance industry is set to maintain this rapid growth from 2017 to 2020, with total assets forecast to reach around RMB 25 trillion ($3 trillion; €3.2 trillion) by 2020.