Research On The Path Problem Of Insurance Funds Investment In Long-term Rental Apartments

In the process of urbanization,the siphon effect of first-line and core second-tier cities is obvious,these cities have higher house prices.It is difficult for middle-income groups represented by white-collar workers to pay,and they have turned to the long-term rental apartment market.At the same time,China’s insurance industry premium income and asset scale continue to grow,and its influence in the economic,social and financial markets is increasing.Long-rent apartments have a long-term stable return,the location of the property is superior,with a high potential for appreciation.These characteristics are consistent with the long-term,stable and low risk preference of insurance funds,especially life insurance funds.If the insurance funds can choose the appropriate path and principle to invest in long-rent apartments,not only can make the demand structure of the real estate market rationalization,but also help to solve many problems in the operation of long-rent apartments,and can effectively improve the asset and liability matching of insurance funds,optimize the investment structure,reduce investment risk and improve investment returns.Insurance funds investment real estate has direct investment and indirect investment two ways,can be subdivided into equity cooperation model,wholly-owned model,REITs,the purchase of bonds and other forms.Different ways or paths have different characteristics,but also have different conditions and applicability.At the end of May 2018,the China Banking Insurance Regulatory Commission issued the Notice on the Relevant Issues Concerning the Participation of Insurance Funds in the Long-rent Market,which clarified that insurance funds can participate in the long-rent market.The time is still less than one year ago,and insurance institutions are still in the early stage of exploration in terms of investment methods and path selection and improvement.At present,Ping An Group and China Reinsurance Group are all investing in long-rent apartments through the equity cooperation path.There is a problem of a single investment path and poor exit.Because there is not enough understanding of the investment path,there is no complete experience in China to learn from,and other insurance companies interested in investing in long-rent apartments have a wait-and-see attitude.In addition,there are doubts,reliance,lack of long-term investment philosophy,need to improve the level of risk control,lack of professional talents and imperfect legal policies in the implementation of the path.Choosing the right investment path is the key to whether the insurance funds invest in the long-rent apartment project can achieve the desired goal.Foreign countries such as the long-rent apartment market in the United States have developed for a long time and have mature investment experience.Thanks to the high return on investment in long-rent apartments and the improvement of laws and taxation in REITs,investors mainly use REITs to indirectly invest in long-rent apartments in the United States.The principles,methods and perspectives in foreign route selection have certain reference significance for China’s investment route selection and improvement.In the process of selecting and perfecting the path,we should follow the principles of prudence,rationality,and overall consideration of historical status and future,multi-party synergy.On the basis of consulting industry experts,investment risk,investment income,main body status and environmental maturity are selected as the main considerations for the choice of long-rent apartment routes for insurance funds investment in China.Then,using the analytic hierarchy process,it is concluded that equity cooperation is the current stage.Insurance companies invest in the main route of long-rent apartments,but the route will take up a lot of money,insurance companies should have a clear exit channel.Although REITs are not the best investment path when making decisions using AHP,when the environment is mature,the exit of the previous funds can be realized by issuing RETIs products,thus establishing a complete investment path of “equity cooperation + REITs exit”.The paper further points out that after the equity cooperation stage,closed-end and contract-type funds are more suitable types,and detailed analysis of the specific operation process and precautions of the “equity cooperation + REITs exit” path.Because there is no complete investment success case in China,and there is no systematic data to provide reference,the expert interview method is used to analyze the results of the paper.Suggestions based on path selection and improvement include: adhering to the confidence of the path chosen by cautious rationality;avoiding excessive dependence on the path;adhering to the investment philosophy held for a long time;continuously improving the risk management and control level;forming a professional investment team and actively storing professional talents Actively promote the improvement of relevant laws and policies at the government level.