Insurer China Life has agreed to buy HK$5.82 billion ($750.35 million) in additional new shares issued by Sino-Ocean Land Holdings, the developer said in a filing on the Hong Kong Stock Exchange over the weekend.

After buying approximately 16.57 percent of the enlarged share capital of Sino-Ocean Land, one of the largest real estate developers in Beijing, China Life, the country's largest insurer, will overtake Sinochem Group to become the second-largest shareholder of Sino-Ocean Land.

The deal not only boosts the developer's ability to raise funds, but offers the insurer a good opportunity to enter the real estate market, which is believed to be a stable and long-term source of money, said He Tian, an analyst at the China Index Academy, a real estate research institute.

Domestic insurance companies have been more active in real estate investing since the revised Insurance Law that took effect October 1 permitted them to invest in the real estate market.

Ping An, the country's second-largest insurance company, had earlier invested in the real estate market via its subsidiary, Ping An Trust and Investment, which invested in two property developers, the Greentown Group and the Gemdale Group.

The country's insurance market is expected to have more potential to grow in the coming year compared with the banking sector, He said, noting that real estate investments will help insurance funds diversify their portfolios.

But both He and Hao Yansu, head of the insurance department at the Central University of Finance and Economics (CUFE), said it is hard to predict whether or not insurers will boost their investment in real estate next year, as it will depend on the situation then.

However, detailed measures to regulate real estate investment by insurers have not been unveiled. Government regulators are wary of the current real estate market, Hao said.

Hao said insurers will likely be allowed to invest no more than five percent of their capital in the real estate industry.

He, the China Index Academy analyst, also said it is not the first time China Life has set foot in real estate investing. The insurer also owns shares in Vanke, the country's largest listed developer. But its plan to buy stakes in Sino-Ocean Land will be the largest-ever deal in terms of the amount of money involved because of additional stock issuances, He said.

But He noted that investment by insurers directly via additional stock issuances is not likely to prevail, as most investment will be injected through the secondary securities market where previously issued stocks and other financial instruments are transacted, and through specific cooperation projects.

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