Ping An Insurance Group agreed to purchase the Lloyds Building in London from Commerz Real, a German closed-end fund, for GBP260 million. The transaction represents the first purchase by a Chinese insurance company in Britain. “This is a potentially landmark transaction, given it is the first by a Chinese insurance company overseas,’’ said Jon Crossfield, Director at Savills’ Central London team. “It is a high profile and confident entry to the market for them and further illustrates the dominance of overseas investors in London at present.” The Lloyds Building, a landmark property, is home to the world’s leading insurance market and leased entirely to the Society of Lloyds on a lease expiring in 2031. The building is located in the City of London and was bought by Commerz Real in 2005 for GBP231 million. “Prime net initial yields in the City of London are around 5%, so this building has traded just over 6%,” said Ben Cook, head of British inward investment at property consultancy DTZ in London. Robert Ciemniak, Chief Executive of Real Estate Foresight, a consultancy that provides analysis of Chinese property markets to investors, reckoned a 5% return in Beijing and Shanghai would require strong rental growth to underpin it. There is limited supply of A-grade offices in central business districts in Beijing and Shanghai for mainland insurers to invest in. “I believe that other mainland insurers will likely follow suit. Asset prices in some European countries have dropped a lot and are at bargain levels now,” said Chen Xingyu, Analyst with Phillip Securities in Shanghai.