TOKYO -- Dai-ichi Life Insurance will buy into overseas real estate for the first time in 26 years next month, looking further afield for new sources of yield as the Bank of Japan's negative-interest-rate policy squeezes returns.
The core Dai-ichi Life Holdings unit will invest 10 billion yen ($90.2 million) this fiscal year in a fund of funds, a first for a Japanese life insurer. This offers greater diversification than direct investment, reducing risk exposure, and allows for hedging against exchange rate shifts as well.
The insurer will invest in 500 office buildings, commercial facilities and other properties across 15 countries in Europe, where currency hedges are relatively cheap and rents are expected to rise. The company will step up this spending from next fiscal year onward, with plans to add real estate in other developed markets such as the U.S. and Australia to its portfolio.
Dai-ichi Life invested heavily in overseas real estate in the 1980s, with its portfolio peaking at 600 billion yen. But it shed these holdings after Japan's economic bubble burst, unloading the last of its foreign property assets in 2001.