Australia’s third-largest superannuation fund, Aware Super, will consider growing its overseas exposure to up to 60 percent of its real estate portfolio.
Alek Misev, head of property at Aware Super, told PERE that the pension is “very comfortable” investing outside of Australia. “We might end up 50:50 longer term,” he said, referring to the investor’s overseas versus domestic allocation. “We might even go to 40 percent Australia and 60 percent global because the market [in Australia] is so small that it doesn’t really make sense to have all your money here.”
With a real estate AUM of A$10 billion ($6.43 billion; €5.92 billion), 70 percent of its portfolio is currently invested in Australia, 20 percent in Europe, and 10 percent in North America.
While Misev did not disclose the exact timeline for adjusting the geographical allocations in Aware Super’s property portfolio, he anticipated the investor will become very “well-established” in Europe over the next few years. The superannuation fund is in the process of setting up its London office, which is expected to grow to 30 to 40 people in three years. With real estate one of the key areas for Aware Super’s overseas expansion, Misev has relocated two people from his team in Australia to London and is planning to hire another employee locally later this year. The firm will consider building a team in the US depending on the success of its London operation.
Similar to its strategy in Australia, Aware Super will focus on the residential and industrial sectors in its overseas real estate investments. The pension is also looking at expanding into adjacent sectors such as cold storage, self-storage and data centers in Europe. Today, the fund has three European real estate investments, which consist of ownership stakes in UK build-to-rent operator Get Living, Netherland’s aparthotel chain City ID aparthotel, and Spanish residential platform Vivenio Residencial Socimi.
“Again, there’s more opportunity in Europe because the Australian market is only about 4 percent of the global property market and is quite small. We are also looking at those sectors here, though,” Misev said. “We feel that we can probably get better scale over time in Europe because you can grow across different countries.”
Aware Super began rebalancing its real estate portfolio in 2015. Since then, the pension fund has sold all its office and retail assets in the US and Europe. Today, 40 percent of its A$10 billion real estate portfolio is in residential, 30 percent in industrial, 20 percent in office, and 10 percent in retail. For comparison, in 2015, the fund had 50 percent of its A$2.5 billion real estate portfolio in retail, 40 percent in office and 10 percent in industrial.
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