Taiwan’s Financial Supervisory Commission recently unveiled proposed new rules governing overseas real estate investment by insurance companies, which are expected to come into effect by the end of March 2016. Under the current regulations, the cap on offshore real estate investment is set at 10% of owner’s equity for Taiwanese insurers, unless otherwise specified. Under the proposed new rules, the maximum allocation to overseas real estate investment will be determined by the insurer’s risk-based capital (RBC) ratio. Furthermore, insurance companies will not be able to apply for an additional quota should their total investment exceed the ceiling amount.
CBRE believes the proposed new rules, once
implemented, will benefit medium-sized insurance companies in good financial
shape as it will allow them to allocate more capital to overseas real estate.
However, large insurance companies which have purchased property overseas may
become more cautious due to their total investment amount being capped at a certain
level.
In recent years, yield levels in Taiwan have
fallen to historical lows due to the significant increase in property prices
combined with moderate rental growth. Domestic insurance companies, although
cash rich, have been constrained by minimum yield requirements (currently
2.485%) which have hindered them from investing in the domestic real estate
market.
Joseph Lin, Managing Director of CBRE Taiwan
comments, “Investment opportunities overseas, which provide stable income
streams and higher returns, will continue to entice Taiwanese insurers despite
the changes in total permitted allocations. They are expected to continue to
display a strong appetite for core office assets in gateway cities of mature
markets.”
Disclaimer:
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
