Institutions have US$14b to buy overseas assets

Mainland insurers could spend about US$14.4 billion on overseas commercial real estate, aided by a stronger local currency and easier regulations amid a limited supply of prime properties at home, CBRE said.

The insurers were seeking high-quality office investments in international gateway cities such as London and New York, CBRE said. Asian markets with similar cultural backgrounds such as Singapore, Hong Kong and Malaysia would also be major destinations, it said.

Beijing last year made it easier for insurers to buy real estate and other assets outside the country, a move that was expected to help them improve their investment yields. The yuan has risen 6.3 per cent against the British pound and 8.2 per cent against the Canadian dollar this year.

"Most of the Chinese investors with sufficient capital are now facing limited domestic investment channels," said Frank Chen, the head of research for China at CBRE. "Factor in the escalating purchasing power enabled by the continuous appreciation of the [yuan] and now is the ideal time for Chinese capital to enter the overseas market."

Mainland insurers had total assets of US$1.2 trillion in 2012 and new regulations allowed them to invest as much as 15 per cent of assets in "non-self-use" real estate, CBRE said. Most insurance funds globally had about a 6 per cent allocation to real estate, with 20 per cent of that in offshore markets, it said.

Ping An Insurance, the mainland's second-largest life insurer, in July agreed to buy the Lloyd's of London building from a Commerz Real-managed fund, two people with knowledge of the transaction said.