AustralianSuper, one of Australia’s largest superannuation funds, is strengthening its domestic property portfolio with the selection of domestic investment managers ISPT and QIC Global Real Estate for a residential mandate. The exact size of each mandate was not disclosed, but both will involve primarily residential development in the form of broadacre subdivision, or sectioning off plots of land not currently developed for urban purposes and turning them into residential lots, according to head of property Jack McGougan.
“We’ve been researching the sector for a long time, and we see good long-term opportunities for maximizing returns to our members,” McGougan said in the statement. “What these mandates are about is identifying long-dated projects. It’s not about short-term house price dynamics but rather the opportunity to deploy capital based on the sector’s long-term profile.”
This mandate represents the third real estate mandate awarded by AustralianSuper in three months and the fifth in the past year. Just last month, the A$75 billion (€52 billion; $71 billion) superannuation selected TIAA Henderson Real Estate for a central London office mandate and Rockspring Property Investment Managers for a Continental European investment program. These mandates are part of the fund’s plan to create a global real estate portfolio over the next five years and grow real estate to 10 percent of its total assets.
As with AustralianSuper’s other mandates, this residential account is more opportunistic in nature, and the managers will consult with the fund before making any investments, according to a spokesman. “When looking to invest in residential property, sourcing long-term partners with specialist investment capabilities relevant to the sector is critical,” McGougan added. “What we are aiming to achieve through these mandates is the necessary geographical reach and expertise.”
Currently, AustralianSuper has approximately 8.6 percent of its assets in real estate globally, or approximately A$6.45 billion. The fund also has worked with QIC before, hiring the firm for a US retail investment mandate in November.