Until recently, regulations relating to investment by Asian insurance companies were highly restrictive and limited the capital that insurers were able to deploy into real estate. However, this situation is gradually changing as authorities in a number of major markets have permitted overseas investment; increased allocations to real estate and simplified the approval process. In recent years a number of leading insurance Asian insurers have begun to acquire real estate outside Asia Pacific, completing US$2.4 billion worth of transactions in 2013. Asian insurers are displaying a strong preference for trophy assets in gateway cities, particularly London and New York, with a deal size of over US$300 million. However, deploying capital to the global real estate market brings with it a number of challenges. These include the lack of overseas investment experience, tax issues and approval requirements.
CBRE Research expects insurers’ capital deployment to real estate to increase in proportion with the total asset size of the sector, which expanded at a rate of around 13% per annum between 2008 and 2013. The total real estate asset size of the Asian insurance sector is projected to reach US$205 billion by 2018, an increase of US$75 billion over the next five years.
This paper provides an overview of the regulatory relaxations currently taking place; quantify the expected increase in investment; identify the challenges involved in investing overseas; and discuss the various channels via which Asian insurers can invest.
Download Liberalisation and the Rise of Asian Insurance Investment in Real Estate | July 2014