What happened to insurance funds investing in real estate?

The amended PRC Insurance Law (中华人民共和国保险法) came into effect in October 2009, opening the door for Chinese insurance companies to invest in real estate. A year later, the China Insurance Regulatory Commission (CIRC) released Tentative Measures for Investment in Immovables with Insurance Proceeds (保险资金投资不动产暂行办法).

The new Measures represented the first official attempt by the CIRC to provide detailed guidelines as to the procedures and requirements for Chinese insurance companies to expand their investment avenues into real estate. They were designed to modernise China's insurance industry.

“What happened was the insurance companies quickly outgrew the regulatory framework guiding and managing the industry. As premium revenue collections grew, insurance companies needed new avenues to invest that were not expressly authorised under existing laws and regulations,” said Joel Rothstein, a partner at Paul Hastings specialising in Asia real estate. There was a lot of excitement at the time, but in practice, investments have been slow to materialise. “Considering the numbers of high profile projects and deals, there has not been a dramatic impact yet,” he added.