The development of Australia's pension system is projected to drive a rise in the amount of Australian capital invested in foreign property over the next seven years. shop for sale in qatar
According to a recent study from Jones Lang LaSalle, the funds are expected to devote $75 billion to offshore investment over the next seven years, with 10% of that going to foreign real estate.
With $1.3 trillion in assets under administration, Australia's Superannuation programme is the world's fourth largest wealth pool by some measures. By 2020, contributions to the programme are projected to hit 12% of individual wages, increasing the amount of money available for foreign real estate investment.
After the financial crisis, Australian capital has been largely absent from foreign real estate markets, despite being one of the largest cross-border buyers, according to JLL. International real estate markets, on the other hand, would gain as domestic supply shrinks.
"We expect that demand for direct real estate from Super Funds will outstrip domestic supply between now and 2020," according to John Talbot, head of capital markets at JLL Australia. "While Europe and the United States are likely to be the initial preferred destinations for this money, we expect emerging markets to gain more as a result of their continued strong economic development."
In the medium to long term, emerging markets in Asia Pacific will likely be targeted, as the region is expected to account for up to 50% of the global institutional commercial property market by value by 2031, according to the company.
Overall, Super Funds are wary of offshore markets, although this is beginning to change.
"AustralianSuper, the country's largest Super Fund with $58 billion in funds under management (FUM), is the exception, having launched a new strategy earlier this year to gain direct exposure to off-shore real estate," according to Alistair Meadows, head of JLL's International Capital Group in Asia Pacific. "This new change acknowledges that global real estate markets are becoming an increasingly significant long-term necessity for Super Funds," says the statement.
If past threats are mitigated, superfunds are projected to increase their overseas investments.
"We expect the next wave of offshore Australian capital to emerge in the form of joint ventures and dedicated investment mandates with specialist local managers," Mr. Meadows said.