Australian pension funds are staying bullish on real estate investments despite a daunting commercial property market, as less-traditional opportunities that favour their long-term investment horizons open up. Most profit-for-member funds plan to either maintain or lift the size of their property portfolio even as they forecast negative returns from the sector for a second year in a row, as valuations in the office and retail segments shrink. Funds have been grappling with a slew of challenges in commercial property including poor income growth and a liquidity squeeze, resulting in lower returns amid rising interest rates and faltering demand.
But that is also encouraging investment heads at cashed-up funds to shift attention to less conventional segments such as logistics, storage, data centres and affordable housing. “It is challenging but this market environment really opens up opportunities that you normally will not be able to get access to,” says Alek Misev, head of property at Aware Super. “Liquidity has dried up and people are very cautious. We have the money to invest, so we are looking at the market both locally and globally.”
The rest of this article can be found at investmentmagazine.com.au.