The superannuation industry plans to invest in global real estate starting in Europe later this year. Chan & Naylor Accountants in Pymble discuss this recent move.
The IFM Investors and Industry Super Property Trust (ISPT), which are owned by 27 superannuation funds, will soon launch International Property Funds Management (IPFM) late in 2018, which is said to target diversified property investments initially, targeting income-producing assets.
IPFM will first invest in London, Paris, Berlin and Frankfurt. It is now mapping out its investment strategy that will focus on core properties in European gateway cities. The initial raising could be $500,000 with the first transactions that will likely happen in 2019. This will enable Australian super funds to invest in large-scale infrastructure and offer competitive risk-adjusted returns.
It can be remembered that the superannuation industry had poor experiences on their first overseas real estate investments a decade ago because it happened during the global financial crisis. This led to losses for investors. Since then, super funds just invest an average of 10% in property, mostly focused on the Australian property market only.
However, global investors are coming to Australia for geographical diversification and experts believe it may be good for superannuation to allocate the same level of investment overseas. AustralianSuper and REST have direct property investments in joint ventures with local partners, increasing long-term investment in core assets overseas like London.
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