China is set to see a wave of demand for quality commercial real estate as insurance companies are allowed for the first time to invest in the sector, real-estate consultancy Jones Lang LaSalle Inc. Chief Executive Colin Dyer said Monday.
In August, China’s insurance regulator announced a long-awaited revision to its rules, allowing insurance companies to invest as much as 10% of their assets in commercial real estate and as much as 20% of their assets into the stock market.
Analysts are concerned that restrictions put in place this year on home purchases will become a drag on overall economic growth as construction and investment activity in that sector slows. New demand for commercial real estate from insurers could therefore become an important support for the property sector and the wider Chinese economy.
China’s insurance companies have around 4.6 trillion yuan ($685.15 billion) of assets under management, growing at around 20% per year, Mr. Dyer said in an interview. If they invest their full 10% allotment into commercial real estate, that amounts to 460 billion yuan, or $68.5 billion of potential demand, compared with just $17 billion of total investment last year in commercial real estate, he said.