Australian property sector must compete for Chinese equity boost
7 December 2012
Australia’s property sector is going to have to work to woo a new wave of Chinese investors, following the release of long-awaited regulations green-lighting investment in overseas assets by Chinese Insurance companies.
The changes, issued by the China Insurance Regulatory Commission’s (CIRC) in October this year, allow the country’s insurers such as China Life, AIA, China Pacific, and Ping An to significantly expand their offshore investment.
Historically, these organisations have had restricted options beyond domestic investments, limited to certain stocks and bonds issued or listed in Hong Kong. With regulations now somewhat relaxed, investment opportunities have been opened up to 45 world markets in a range of asset classes.
Australia has been recognised as one of the 20 designated “developed markets” in which real estate and other investments are permitted.
Sian Sinclair Head of Real Estate & Construction Group for Grant Thornton Australia says the changes mean a significant expansion to available foreign equity.
“The key will be actively marketing to these investor groups as we are competing with strong markets including the UK, USA and the like, who are already vying for the Chinese investment dollars. We are already working closely with our China firm to identify opportunities for Australian investment.”
Under the new rules Chinese insurers can now invest up to 15 per cent of their total assets in overseas investments. It has been estimated that such companies had the equivalent of over AU$900 billion in assets at the end of last year, providing a new potential international investment pool of over AU$135 billion.
The form of direct investments allowed in real estate remains restricted to mature commercial and office property with stable income located in core areas of the restricted developed market list and Real Estate Investment Trusts (REITS), listed and trading in these markets.
According to Ms Sinclair, Australia can expect to see increased interest from China Investors in established commercial sites in our larger capital cities, as well as an investment boost for our Australian Listed REIT market.
For more information about CIRC’s “Implementing Rules of the Interim Measures on Overseas Investments by Insurance Companies” and the implications for Australia’s property sector, or to speak with Sian Sinclair, please contact:
National PR Manager
Grant Thornton Australia Ltd
T +61 2 8297 2426