Following the acquisition of the Shanghai North Bund project with a cost of 5 billion yuan in January 2023 and the renaming of the project to "AIA Financial Center", AIA Life Insurance Co., Ltd. *** hereinafter referred to as "AIA Life") has acquired real estate projects again.
On 31 January 2024, AIA Life announced the completion of the acquisition of a controlling stake in the CapitaLand Startrade project in Beijing's Chaoyang District (CBD), with a total consideration of nearly RMB2.4 billion.
It is reported that this is the first real estate project directly invested by AIA Life in Beijing, and the funds are mainly in the insurance liability reserve. AIA Life sees this move as "another powerful measure to continue to invest in the local market, deepen and promote the healthy development of the real economy, and seize new opportunities for diversified development".
AIA Life's frequent investment in the bulk real estate market is actually a microcosm of insurance capital in the past two years. With the recovery of real estate policies, the real estate investment of insurance institutions has set off a round of "small upsurge" since last year, from Beijing, Shanghai and other super first-tier cities, to Hefei, Wuhan, Zhuhai, Nanjing, Kunming and other first- and second-tier cities, from commercial office buildings to logistics and industrial parks, there are insurance companies among buyers, among which commercial real estate is the mainstay.
In addition to policy factors, the "mutual benefit and win-win" of capital demand is also another important factor for insurance capital to enter the real estate market.
#Insurance funds concentrated their firepower to start "buying, buying, buying".
In the past year, insurers have started a "buy, buy, buy" model for real estate investment. The number and scale of real estate purchased continued to rise, with a number of transactions amounting to 10 billion yuan. Among them, leading insurance companies such as Chinese Life, Ping An Life, Pacific Life, Xinhua Insurance, and Taikang Life Insurance mainly invest funds in existing real estate projects in important areas of Beijing and Shanghai.
According to the data disclosed by the Insurance Association of China, in the first three quarters of last year, the actual investment stage of insurance funds was a large-scale real estate investment planThere are at least 9 projects with a total investment of 92.5 billion yuan
On January 11, 2023, Ping An Life invested in six commercial office real estate projects, including Raffles City Shanghai, with the funds** being the traditional portfolio of life insurance, and the balance of the account contributed to this project was about 2997.3 billion yuan. The total investment amount of the project is expected to be no more than 33 billion yuan. Since then, Ping An Life has invested heavily in four major industrial park projects, including Shanghai Oriental Wanguo Project, Shanghai Hongyuan Science and Technology Innovation Project, Beijing Hongyuan International Project, and Beijing Hongyuan New Era Project, with a total investment of no more than 733.3 billion yuan, and the cumulative investment has exceeded 6 billion yuan.
According to the official website of the Insurance Association of China, Ping An Life has contributed a total of 538 yuan to five real estate projects9.6 billion yuan
Deng Bin, chief investment officer of Ping An, has previously said that Ping An is optimistic about real estate investments with stable cash flows, "such as commercial investments, long-term rental apartments, and park investments, which will bring long-term stable cash flow and the potential for value appreciation." According to its introduction, in Ping An Insurance's funds, the scale of real estate investment accounts for 47%, of which property rights account for 60%, mainly commercial offices, rent-collecting office buildings, shopping malls, etc.
In the fourth quarter of 2023, Joy City, Vanke A, and ST World Trade Center successively issued announcements, announcing that their subsidiaries had reached asset transfer or financing agreements with insurance companies, including China Post Life Insurance, Huatai Asset Management and China Life Insurance Company. The total amount of the three transactions exceeded 10 billion yuan.
At the beginning of 2024, New China Insurance announced that it had signed a limited partnership agreement with CICC Capital to jointly establish **. The scale of the ** is 10 billion yuan, and Xinhua Insurance (as a limited partner) intends to subscribe for 999.9 billion yuan, CICC Capital (as the general partner) intends to subscribe for 1 million yuan, which will directly or indirectly invest mainly in the invested enterprises of the assets of the holding real estate project. According to industry analysis, Xinhua Insurance launched 10 billion ** investment in real estate, and it is expected that the real estate layout will also accelerate in the later stage.
#Why is the deployment of real estate accelerated by insurance capital?
In recent years, insurers have been looking for new investment opportunities. But in fact, while there are ** real estate stocks, why do insurance companies favor real estate projects?
On the whole, insurance companies frequently increase investment in real estate projectsThe primary reason is that the "long-term sustained return" attribute of real estate investment is more in line with the long-term attribute of insurance companies' funds. It should be said,High-quality long-term real estate investment can help insurance companies increase the choice of alternative investment targets, enrich the investment varieties of insurance companies' investment portfolios, and increase real estate investment is a reflection of insurance companies' timely adjustment of investment portfolios according to market conditions.
From the perspective of the acceleration of the real estate layout of insurance capital, this is not unrelated to the fact that the current real estate market is underestimated, and the investment cost performance of real estate projects in first-tier cities is considerable. "High-quality commercial buildings and industrial park projects in the center of first-tier cities such as Beijing and Shanghai have certain investment value. "Some real estate investment related people said that the reason why insurance capital has a soft spot for real estate projects is because the investment period of insurance capital is long, the amount of funds is large, and the matching degree between the two is high; Second, after the early adjustment, the investment value of real estate has gradually emerged. It is expected that all kinds of assets are now at the bottom, and there will be good value-added income in the next three to five years of investment cycle.
Liu Hui, vice president of Chinese Life, previously said at the results conferenceMature commercial real estate has a stable cash flow and is able to maintain and increase its value across cycles, while being resilient to inflation and volatility. It has low correlation with other varieties and is an important allocation variety for long-term funds such as insurance, and the allocation of certain real estate assets in the portfolio is conducive to the long-term stable return of insurance funds.
As for the future trend of insurance funds and real estate, some industry analysts pointed out that although many institutions' investment in real estate is shrinking, insurance funds have the strength to make layouts. In addition, insurance funds also have a preference for real estate, especially when it comes to commercial real estate, office buildings, industrial parks, etc., which are more stable, and this kind of investment is also out of a "** mentality." In the future, the commercial centers of first-tier cities, including logistics parks, are core resources, which are the preferred layout directions of insurance capital, and the trend of insurance capital layout of real estate will continue.
In the environment of stricter supervision of the use of insurance funds, safety, liquidity and profitability have always been the three principles of insurance fund investment.
In March 2023, the Shanghai ** Stock Exchange issued and implemented the Guidelines for the Application of the Rules for the Confirmation of Asset-backed Listing Conditions on the Shanghai ** Exchange No. 5 - Requirements for Insurance Asset Management Companies to Carry out Asset-based Business (Trial) to encourage qualified insurance asset management companies to actively carry out ABS and REITs business. On October 13, 2023, the first batch of five insurance asset management companies of China Life, Taikang, CPIC, PICC and Ping An were approved to carry out ABS and REITs business on a pilot basis, and on December 20, 2023, the "Huatai-Zhongjiao Road Jianqing West Bridge Holding Real Estate Asset-backed Special Plan" has been successfully established.