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Fubon Life makes offshore debut with £139m London deal

The Taiwanese insurer is at the crest of a wave of Taiwanese insurance capital said to be coming to mature Western markets following de-regulation in the country’s insurance sector last year.

Fubon Life Insurance Company, the Taiwanese insurer, has agreed its first investment in UK real estate, continuing the trend of Asian capital flooding into mature western real estate markets.

The Taipei-based insurer has agreed to acquire One Carter Lane in the City of London for £138.8 million (€176.6 million; $220.6 million) from LondonMetric Property, a London-listed property company, in a deal expected to complete in January.

The sale is conditional upon Furbon Life gaining necessary regulatory approvals. If those are granted, the transaction marks it as among the first Taiwanese insurers to export its capital into international real estate markets after the country’s authorities de-regulated the industry last year enabling them to do so.

Fubon Life said in May it was actively looking for properties in Europe for its first overseas investment, stating it wanted to deploy as much as $3 billion in offshore property in the next three years to four years. 

According to CBRE, the global property services firm, Taiwanese insurers are a significant part of a wider de-regulation trend happening among Asian insurers that could result in approximately $75 billion of equity being allocated to real estate by 2018.

CBRE said in a dedicated report: “CBRE predicts that the combined effect of an increase in insurer’s asset sizes and increasing liberalization will result in Asian Insurer’s real estate investment assets growing from $130 billion in 2013 to $205 billion in 2018.”

It said: “Compared to mature markets, there is a lack of investible assets in Asia, however. This coupled with the recent rule relaxations, means we are seeing more Asian insurers tapping other regions.”

The firm predicted Taiwanese insurance companies would be among the most active overseas real estate investors as few institutional grade properties in the their home market meant yields were compressed for such assets – from 3.5 percent on average in 2009 to just 2.2 percent last year.

Direct investments, the firm said, would be their preferred mode of investment as demonstrated by Fubon Life’s investment in One Carter Lane.

The 129,000 square foot office is 73 percent leased by MFS, the US asset management firm and Scandinavian bank SEB. Their combined contracted rental income is currently £4.54 million but could rise to £6.29 million upon letting the final space. According to LondonMetric Property, it is in detailed negotiations with a potential tenant for that space.

LondonMetric Property acquired the asset in 2011 for £75 million and has invested £15 million refurbishing the asset.

Fubon were advised on the investment by property broker Savills.