According to the report, ‘The rise, fall and future intentions of Australian offshore investment’, the bulk of this capital will come from Australia’s pension (Superannuation) system in which assets under management (AUM) are set to pass USD 2.8 trillion by 2020.
USD 80 billion of this is likely to be available for overall offshore investment of which, by current measures, 10 percent 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 percent of its current USD1.3 trillion Assets Under Management (AUM).
Contributions are set to gradually increase to reach 12 percent of an individual’s salary by 2020, significantly increasing the amount of capital available for investment into international real estate markets.
Richard Bloxam, Head of European Capital Markets, Jones Lang LaSalle, commented, “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.” (source: europaproperty.com)