PICC Buys Capital Times Square

Beijing-based People's Insurance Company (Group) of China Limited (PICC) and its subsidiaries lately spent CNY 3.74 billion in buying Capital Times Square for self use, translating to less than CNY 31,000 per square meter.

The insurance group is understood to be attracted by the position of Capital Times Square. In the coming two years, PICC and some of its subsidiaries are to move to the new building. Covering the building space of 122,000 square meters, Capital Times Square consists of a five-floor shopping center, a 5-floor office building and 400 parking-spaces.

Since 2009, those mature office buildings in Beijing were less available to investors. Because of this, many investors began turning more sights to those unfinished office buildings or less popular ones. Capital Times Square is such a kind of office building, even though it has a favorable geographic position.

Three months ago, China's insurance industry watchdog China Insurance Regulatory Commission (CIRC) released the new policy for insurance institutions to make realty investment. As predicted by market observers, these insurance institutions will become the major land buyers in the coming year. As the regulatory department, CIRC requires that insurance institutions shall not violate related regulations to develop residential projects under the name of self-use properties or commercial projects.

With the business expansion and increasing premiums and capital, more Chinese insurers are entering the commercial estate sector. On the other hand, the higher yield rate is attractive to insurance companies. Currently, the rate of return on such investment stands about 6%.

Under such a circumstance, some insurance firms began buying properties as from the third quarter of last year. Based in Shenzhen, the trust unit of Ping An Insurance (Group) Company of China, Ltd in this September bought a plaza in Chengdu for its own use. By far, Ping An has not made any investment in commercial estate. Taikang Life has also bought a land in Beijing, with the total areas of 60,000 square meters; and the financial center Shanghai-based China Pacific Insurance (Group) Co. has also bought a plaza in Beijing at a cost of CNY 4 billion.

Recently, such insurance firms as Taikang Life Insurance Co., Sino Life Insurance Co., Sunshine Insurance Group, Anbang Property & Casualty Insurance Company Limited and so forth were bidding for the land plots in the central business district (CBD) of Beijing.