AustralianSuper to double investment in commercial property

AustralianSuper, the multi-industry employer superannuation fund, is set to double its commercial property investments over the next five years, according to Chairwoman Elana Rubin.

Investments in direct property through unlisted property trusts have risen from $4.17bn in June 2011 to $4.54bn in June 2012, annual reports show.

Rubin claimed the super fund would seek to invest in building its portfolio of CBD offices, high-end retail centres and other commercial assets in a speech to the Israel Australia Chamber of Commerce luncheon, reported by the Australian Financial Review.

She predicted significant changes for the market in the coming year, with greater competition from institutional investors and smaller super funds, as well as a tendency to invest in assets directly, rather than the “pooled vehicle” approach of passive investment.

Due to a rise in demand for commercial core property across Australia, Rubin also expects AustralianSuper to invest heavily in overseas property, with such assets likely to make up 20% of its future portfolio, compared to only 3% today.

The AustralianSuper annual report states that members have the option to invest in a “range of Australian and international properties, including office buildings, shopping centres, hotels, resorts, factories and warehouses”.

“It’s designed for members seeking strong medium to long-term capital growth and lower volatility than shares”.

The fund – whose members now total 1.9m - “continues to provide diversification benefits and to sustain strong long-term returns” through its investments in direct property, according to the report.

“Our diversified strategy helped to reduce the impact of poorly performing share markets.”

Over half of the fund’s assets are in the ISPT Core Fund, including 78 office, industrial and retail assets, with such prestigious addresses as 500 Bourke Street in Melbourne, 363 George Street in Sydney and Central Plaza One on Queen Street in Brisbane.