China's insurers can now invest in long-term rental housing projects, the banking and insurance regulator has announced. The new rules, which took effect on 28 May, broaden investment channels for insurance funds.
Insurers can invest in both equity and debt related to such projects. They can invest directly, through asset management firms, credit investment plans among other methods in long-term rental housing projects, says a notice issued by the CBIRC.
The housing projects must benefit the economy and society and have stable cash flow. Projects should be located in in large and medium-sized cities and areas that see net population inflows, such as Beijing, Shanghai, and the Xiong'an new districtin Hebei Province .
All necessary approvals for the project must be in place, including planning, construction, operations and management. If a debt investment plan is used, the borrower must make sure that it has 100% of the funds to repay principal and interest.
For debt investment, cash flow of the entities being invested should cover at least the amount of principle and interest of their debt payable.For equity investment, insurance funds should not use the equity of the target projects as collateral to a third party.
Registration of insurance asset investments in long-term home rental projects will be fast-tracked, the statement says.