Taiwanese life insurance companies are seeking property investment opportunities overseas, with a vast majority favoring China after tightened restrictions made investments in the local market difficult, international property consultancy Jones Lang LaSalle said yesterday.
The nation’s nine biggest life insurers alone have about NT$2.7 trillion (US$92.7 billion) in extra funds for real-estate investments, but were urged to show “restraint” by the Financial Supervisory Commission in November, after their record offers at property auctions raised concern about escalating prices.
The commission also raised the minimum yield on real-estate investments to 2.875 percent, from 2.125 percent, and imposed a five-year ban on ownership transfer, among other measures, to rein in commercial property transactions.
“An overwhelming majority of prospective buyers are looking for investment opportunities in China, particularly in Shanghai,” Jones Lang LaSalle Taiwan managing director Tony Chao (趙正義) told a media briefing.
Jones Lang LaSalle, which brokered 43 percent of the property deals in the Asia-Pacific region last year, held a property investment forum on Monday to help channel local funds to overseas property markets, Chao said.
The commission recently announced plans to encourage life insurers to explore real-estate markets in six foreign cities, namely New York, Toronto, London, Frankfurt, Shanghai and Ho Chi Minh City.
These cities offer decent yields of between 4 and 6 percent, with Ho Chi Minh City offering up to 9 percent, Jones Lang LaSalle regional head Alistair Meadows said.
These cities accounted for 15 percent of global property transactions between 2010 and last year, Meadows added.
While investors generally favor markets close to home, Meadows recommended London, which attracted most of the global property funds last year because it offers long-term stable yields.
Jones Lang LaSalle research head David Green-Morgan said Europe and the US remain preferred investment destinations, while major commercial cities in the Asia-Pacific have become shining stars in recent years.
Green-Morgan expects property prices to climb higher in major international cities on the back of excess capital.
However, deregulation is needed for life insurers to make property investments abroad, Chao said, adding that the sector is pushing for regulatory approval to set up special purpose vehicles to save on tax expenses.