DID YOU KNOW super fund members are some of the biggest landlords in our capital cities?
They own a share of offices, hotels, warehouses and shopping centres. The more cash in super funds, the more properties are bought – indirectly exposing fund members even to some of the most iconic office towers in capital cities.
Super funds have an average of 9% of funds allocated to real estate assets, and the companies which manage these properties.
As such, super funds have an estimate of about 20% combined direct and indirect interest in the national office market; and have always been a major commercial property investor, because of the stability and growth potential in the market.
In 2017 alone, super funds allocated about 8% of their $2.5 trillion in assets to listed and unlisted real estate investment.
These super funds will likely continue to take ownership in Sydney and Melbourne (directly and through their investment into listed trusts) … leading to ownership of about 10%-20% of the CBD markets. Around 90% of the office sector is owned by institutions directly and through REITS, super funds, unlisted funds and co-mingled funds.
Super funds have about 1 million sqm of the 5 million sqm office market in Sydney. Melbourne comes in slightly less; but super funds own a large number of buildings there as well.
The office market offers yields of around 5% pa, with less volatility than the sharemarket-listed real estate investment trusts. It also offers long-term and sustainable growth, because of increasing rentals and land values.
Demand for real estate in Australia will likely remain solid … because of its appeal and relative value, versus alternate investments – like bonds and many shares. And that remains true, for both institutional and private investors.
Furthermore, salary allocation to super is expected to increase to 12%; and super funds will prudently allocate a certain amount to property. And this allocation will increase as employees are required to put more into super.
Therefore, if you would like to know how to best structure your investment into commercial property, just click here to learn more about Chan & Naylor services.
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Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.