An increasing amount of Australian capital is expected to be channelled into offshore commercial real estate markets by 2020, according to a new report released by Jones Lang LaSalle at Expo Real.
An increasing amount of Australian capital is expected to be channelled into offshore commercial real estate markets by 2020, according to a new report released by Jones Lang LaSalle at Expo Real.
The bulk of this capital will come from Australia’s pension (Superannuation) system in which assets under management (AUM) are set to pass $2.8 trn by 2020. Around $80 bn of this is likely to be available for overall offshore investment of which, by current measures, 10% will be allocated to international real estate.
Maintained by compulsory contributions, Australia’s Superannuation system is, by some measures, the fourth-largest asset pool in the world with real estate accounting for around 10% of its current $1.3 trn of assets under managements.
Contributions are set to gradually increase to reach 12% of an individual’s salary by 2020, significantly increasing the amount of capital available for investment into international real estate markets.
‘With the Australian domestic market unable to offer sufficient opportunities to provide the real estate exposure sought by funds, European real estate markets are set to benefit with increased investment flows,’ commented Richard Bloxam, head of European capital markets at JLL.
‘We expect the next wave of offshore Australian capital to emerge in the form of joint ventures and dedicated investment mandates with specialist European fund managers,’ added Matt Richards, head of JLL’s international capital group in Europe.
