SMSFs have plenty of reasons to like property
As Australian investors' love affair with yield continues, self-managed super fund (SMSF) property investment continues to rise. Indeed, for Richard Stacker, head of direct property for Charter Hall, if trustees are mindful of their liquidity requirements, there is much to like about property right now.
"I think there are a couple of things that drive how much people allocate to property but the biggest factor is how equity markets are placed," he said.
"Having had such a big fall in equity markets post-GFC, so many investors saw their weighting to property being higher than probably what their bands or their weightings should have been.
"So it took a while until equities started to go back up before the weighting to property started to get more normalised and, in some cases, go underweight," continued Stacker.
"But that's where we are right now."
Stacker added that while SMSFs had long had a love affair with property, increasing allocations had provided many trustees with an opportunity to reassess their sector mix.
"Clearly, SMSFs have always had a higher weighting to property, and residential property in particular, but I think we're seeing an increasing interest in the commercial property space too," he said.
"Yield is a big factor and, unless they're in pension phase, liquidity just doesn't seem to be a real issue for self managed super fund trustees."
For Stacker, even in pension phase, an astute trustee ensures their property allocation is not so large that they can not source their liquidity requirements elsewhere.
"So with our funds, we've seen people getting the benefit of tax deferred income in a self-managed super fund through accumulation phase," he said.
"But then, when they go into pension phase, they're able to make that tax deferred income they've got work just as well in a tax-free regime.
"It becomes a real benefit for them."
Originally published by SMSF Essentials.
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