Insurance Funds Flow Faster into Property Sector

Insurance funds accelerate investing in property sector after Chinese insurance regulator gave them such access in early September.

China Insurance Regulatory Commission on September 5 released interim rules on insurance funds' equity investment and in real estate investment, allowing insurance funds to invest in unlisted companies and properties. More than CNY 450 billion insurance funds are estimated to flow into real estate sector.

Ping An Property Insurance Co., a subsidiary of Ping An Insurance (Group) Company of China, Ltd., has just entered into agreement to acquire the second-phase of Chengdu Zhonghui Plaza from Shui On Construction and Materials Limited at CNY 718 million. The Chengdu Zhonghui Plaza project formerly was an uncompleted project, which Shui On bought at over CNY 400 million in 2006. Research statistics show that average rental for office building in Chengdu is growing at 4.7% quarterly.

According to the agreement, if total rentals for some 450 parking places of the second-phase project reach the minimum CNY 15 million guaranteed in three years upon the completion of the deal, Shui On has right to additionally take CNY 9 million out of the rentals.

annPing An Trust & Investment Co. is buying out Beijing KWG's 24.54% stake in a joint venture in Tianjin at CNY 900 million, according to the announcement of KWG Property Holding Limited, the parent company of Beijing KWG.

Anbang Property Insurance Co. is expecting to buy No.1 and No.2 buildings of former Chengdu administration office center at up to CNY 492 million. Another large insurer in Beijing intends to buy the No.5 building of the center.