Ping An's asset management arm bought the landmark Lime Street site in the City of London, home to the world's oldest insurance market, a source close to the firm said.

A German fund managed by Commerz Real, a unit Commerzbank, bought the building in 2005 for £231 million.

The Ping An purchase price translated into a net initial yield of 6.1 per cent, Savills, the global real estate consultant which advised on the deal, said in a statement yesterday.

"Prime net initial yields in the City of London are around 5 per cent, so this building has traded just over 6 per cent, and so it's attractive from that level," said Ben Cook, head of British inward investment at property consultancy DTZ in London.

Robert Ciemniak, chief executive of Real Estate Foresight, a consultancy that provides analysis of mainland property markets to investors, reckoned a 5 per cent return in Beijing and Shanghai would require strong rental growth to underpin it.

That implies deals like Ping An's purchase are set to be of increasing interest to Chinese insurers, as there is limited supply of A-grade offices in central business districts in Beijing and Shanghai for mainland insurers to invest in.

Chen Xingyu, an analyst with Phillip Securities in Shanghai, said Ping An's move would diversify the firm's investment portfolio and boost returns.

Ping An's total investment yield dropped to 2.9 per cent last year, compared with 4 per cent in the previous year.

"I believe that other mainland insurers will likely follow suit," Chen said. "Asset prices in some European countries have dropped a lot and are at bargain levels now."

Chen added that Ping An's return on its investment was uncertain because the outlook for the property market in London remained clouded by the sluggish economy.

Real Estate Foresight said yuan-based investors buying sterling-denominated assets would have lost 5.2 per cent in the year to June 21 because of currency movements in the period.