AIA looks overseas as investment lags

AIA looks overseas as investment lags

AIA Thailand, the country’s biggest life insurer by total premiums, is revving up its foreign property investments to offset limited bond supply and an unfavourable domestic investment market at home.

The 6-billion-baht, LEED gold-certified AIA Capital Center has a total rentable area of 54,000 square metres.

“Government bonds are getting scarcer, particularly with the absence of a functioning government and a freeze of the government’s 2-trillion-baht infrastructure plan,” said Anucha Laokwansatit, AIA Thailand’s general manager and CIO. “We’re looking to expand our investments, notably to
foreign bonds and equities.”

Last year, foreign investments made up 8% of AIA Thailand’s total investment
portfolio of 640 billion baht.

Mr Anucha did not disclose the exact percentage increase in foreign investment, saying it would be based on periods and returns.

The company now invests 55-60% in government bonds, 13-14% in domestic equities, 1% in property development and the rest in other vehicles.

In 2013, according to the Thai Life Assurance Association, AIA’s total premiums rose by 7.3% to 111 billion baht.

AIA was active in real estate over the past eight years after the Insurance Commission Office allowed life insurers to invest up to 15% of their reserves in property.

The firm invested a combined 10 billion baht in two large office buildings: the 34-storey AIA Capital Center on Ratchadaphisek Road and the 27-storey AIA Sathorn Tower on Sathon Road. AIA Capital Center, the company’s first property development, is complete and had a soft launch yesterday, while AIA Sathorn Tower will be finished early next year.

With an investment of 6 billion baht, the LEED gold-certified AIA Capital Center
will have a total rentable area of 54,000 square metres. The rental rate is 600-750 baht per sq m a month for a three-year contract, but Mr Anucha said the rate could increase to 800-900 baht after launching later this year.

At full occupancy, income from AIA’s first office building would be nearly 600 million baht a year. The firm expects occupancy of 40-50% this year, rising to 100% over the next few years. The two projects are estimated to generate a combined 1 billion baht a year for AIA Thailand.

The company is also looking to invest in offices for rent in major provinces and Bangkok. The company is still waiting for a decision from the insurance commissioner on property development, as insurance firms can only invest in Greater Bangkok property now.

“The long-term property market, particularly for Grade A office buildings, is thriving, helped by mass transit development, economic recovery and the regional economic integration,” he said.

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