SMSFs to revisit property

The chief executive of a specialist self-managed superannuation funds (SMSF) administrator has predicted members of these funds will be revisiting the type of property investments they include in their portfolios, as more funds are channelled towards super to take advantage of the Federal Budget changes.

In particular, Andrew Bloore from SmartSuper feels SMSF members will now be favouring investment in property products that offer more flexibility, as opposed to the more illiquid investments SMSFs have traditionally chosen, such as the member’s own residence.

“We’re seeing the development of more sophisticated property managed funds and trusts that better suit the SMSF investor, and this is also driving the move for planners to get a more comprehensive understanding of all the assets of the client, rather than just the ones they have traditionally controlled, such as equities and managed funds,” Bloore said.

In addition, he believes SMSF members will also increase their use of gearing in regard to property investments. This could come in the form of using a geared property fund or investors borrowing money to facilitate a joint property investment with their SMSF structure.

And the gravitation toward property from these types of investors seems to have already started, according to Macquarie Bank.

General manager of Macquarie Direct Property Richard Stacker said: “Since its opening in January this year, more than 60 per cent of flows into MDPF [Macquarie Direct Property Fund] have come from SMSF investors, and this rate continues to grow as investors and planners learn about the diversification and liquidity benefits of the product.”