New legislation is coming in to force allowing domestic insurance companies to invest directly in properties. Property adviser DTZ said at the end of September 2009, Chinese insurance companies held total assets worth $554.6 billion.
Based on a conservative estimate that 5% of total assets will be invested in direct property, an additional $27.7 billion could enter the real estate market in China over the next five years.
Head of North Asia Research at DTZ, David Ji, said the passing of the law by the Chinese government allowing direct investment will allow the insurance companies to diversify their investment strategies and potentially improve the sustainability and robustness of their returns.
ChennelNewsAsia noted that however, unlike Western insurance companies that have more say over their investment strategy, these Chinese insurance giants are state-owned enterprises and so the Chinese government is, in effect, applying direct control of investment through regulation.