In a move that many saw as ‘inevitable’ – AustralianSuper – the largest superannuation fund in Australia has now offered as much as $500m lines of credit to Australian property developers as they seek to build scale in the real-estate investment and debt markets.
This move heaps pressure on Australia’s big four banks who are the traditionally the dominant lenders in the real-estate markets, as AustralianSuper is now directly lending greater portions of its members $140 billion retirement savings to Australian Property Developers.
The move shows the growing positivity in the Australian real-estate market and the opportunities to achieve quality yields by deploying capital into property development deals.
Scott Watson, Managing Director of CFMG Capital said that investment return on direct investment into property development is ‘compelling’ in a low interest rate environment.
“Larger super funds were always going to follow the lead of SMSF Trustees by entering these markets, albeit of course on an exponentially larger scale. Yet the synergies remain. Capital rich funds, large and small are looking to enter the property investment market and through sheer weight of ‘lazy money’ in superannuation, are finding their way to property development funds.”
Other superannuation funds have also jumped on the bandwagon, with property industry fund CBUS in particular having large debt exposure to real estate.