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How Australian workers’ pensions are funding new homes and properties overseas

Posted on by L. Dreeye
How Australian workers’ pensions are funding new homes and properties overseas

Australians’ hard-earned money is funding the construction of a giant “new city centre” in London and helping to meet the city’s housing shortage.

Canada Water’s huge project promises to build 3,000 net-zero homes, office space for 20,000 workers and lush retail space, and it’s just a sample of the international projects in which Australian pension funds are investing.

AustralianSuper, the country’s largest fund, is pouring hundreds of millions of dollars into the booming region at the same time there is a need for similar investment to tackle the housing crisis at home.

Australian super funds invest billions in housing projects domestically and internationally.

Super funds investing millions overseas

An artistic impression of the site with a water feature, greenery, a bridge, apartments and happy locals walking along it.

The Canada Water area boasts many public spaces. (Delivery: Canada Water London/Australian Super.)

In March 2022, AustralianSuper announced a 50:50 partnership with UK developer British Land to deliver the project.

Situated between a network of fresh water docks and waterways in south-east London, the 21-hectare Canada Water includes large public spaces, swimming pools, sports fields, retail and leisure facilities, and “the first new town center built in the city since recent years.” 50 years.”

An artistic impression of a site with a playground, trees, apartments and happy local parents with their children.

It is positioned as a place where local schools, colleges and businesses will coexist. (Supplied by: Canada Water)

The fund’s initial investment is estimated at more than half a billion dollars.

Meanwhile, at home, Australia’s housing crisis is in full swing.

Image of a residential complex where construction is underway, high-rise apartments and infrastructure are being built.

AustralianSuper’s initial investment in Canada Water is valued at more than half a billion dollars. (Delivery: Canada Water Project/Australian Super)

According to the Business Council of Australia, the housing industry must build “1.2 million homes over the next five years to address the national housing supply crisis”.

It takes money to build houses, and that’s enough for retirement savings.

Aerial photo of a construction project filled with residential development.

An artist’s aerial impression of the Canada Water project. (Delivery: Canada Water London/Australian Super.)

As of 2024, the retirement industry will be worth about $3.9 trillion, but only about 6.7 percent of that will go to the real estate market—a 10-year low.

And not all of them are invested in the Australian property market.

The image of the development is combined with residential buildings, water features and trees. In the UK it is called Canada Water.

Canada Water aims to build up to 3,000 zero-carbon homes and jobs for 20,000 workers. (Delivery: Canada Water Project/Australian Super)

AustralianSuper has more than $4.5 billion in international property assets – in the UK and North America – compared to more than $8 billion in properties in Australia and New Zealand.

“The fund invests in a globally diversified portfolio of assets across a range of economic sectors and seeks to identify companies that provide the best long-term value creation potential in their sector,” an AustralianSuper spokesman said.

“AustralianSuper has committed to investing almost $500 million in build-to-rent projects to deliver more than 1,400 homes by 2027.”

Last November, Australia’s third-largest super fund, Aware Super, announced it had invested more than $10 billion in the UK and Europe.

An image of the bright red Canada Water boardwalk along the water with the development in the background.

The project is making progress, with the first phase of the plan scheduled to be completed by the end of this year. (Delivery: Canada Water London/Australian Super.)

The company currently owns a 22 percent stake in major British developer Get Living, which currently manages approximately $6 billion of rental properties in the UK.

Aware Super has already invested $2.5 billion in the international property market and $7.5 billion in the Australian property market.

Why not invest it all here in Australia?

An Australian delegation of 23 business leaders, academics, city planners and various consultants recently visited London to explore how the city’s east is coping with housing problems and why it is attracting Australian investment.

They concluded that both London and Sydney face the same challenge: providing enough housing to keep up with population growth.

Leading the delegation, Western Sydney Leadership Dialogue chairman Christopher Brown visited the Canada Water project and said Australia should attract more investment locally.

“We’d like to see Australian superannuation funds invest Australian workers’ money in affordable housing,” he said.

A man in a dark blue suit and white checkered shirt stands on the grass and poses for the camera.

Western Sydney Leadership Dialogue chairman Christopher Brown wants to see super funds invest more in Australian housing projects. (ABC News: Berge Breyland)

Mr Brown believes the way to retain big investors is through more ambitious projects.

“Large investments beget new large investments. The scale is huge,” he said.

“Let’s stop messing around with half a dozen apartments here and a couple of houses there. We need regeneration and urban development on a global scale.”

He compared the Canada Water project to the Moore Point project in Liverpool, south-west Sydney.

An artist's impression of the Moor Point development in Liverpool, combining water features, tall apartments and trees.

The Moore Point project in Liverpool is underway. (Includes: Moore Point.)

The project promises to create 11,000 homes and 23,000 jobs, as well as at least 10 hectares of public space along the river.

“Ten years later, this project has finally qualified for approval so the public can have their say, with the support of the council,” Mr Brown said.

“Rough old England can take projects from concept to development in a third of the time Sydney is looking at.”

Moore Point, owned by Leamac Property Group and Coronation Property, has finally moved into public exhibition stage.

A plot of land planted with grass and shrubs, without urban development.

The current Moor Point development in Liverpool will look very different in 40 years. (Includes: Moore Point.)

Mr Brown called on all levels of government to review the planning system so it “doesn’t take 10 years from concept to exhibition and then another 10 years to develop”.

“Prime Minister, Prime Minister, get on a plane, go abroad and bring global funds here.”

The Moore Point developers’ website says the project will take 40 years to complete.

An image of an area similar to a central business district, filled with greenery, cafes, tall buildings and bright blue skies.

The idea behind Moore Point is to champion “sustainable urban renewal on the waterfront.” (Includes: Moore Point.)

The Dilemma of Bureaucratic Red Tape

According to the federal government’s 2024 budget documents, Australia “has one of the lowest numbers of homes relative to population in the OECD.”

Combined with “slow” planning and zoning practices and “long-term chronic underinvestment in social housing”, Treasury documents paint a picture of a bottleneck in the supply chain.

Housing Minister Claire O’Neill acknowledged the problem and said “the government has stepped up new efforts across all states and territories to streamline planning and approval processes.”

Claire O'Neill speaks at a press conference at Parliament House

Home Secretary Claire O’Neill spoke on this issue. (ABC News: Matt Roberts)

This week the federal government passed its buy-to-let bill through parliament.

It aims to increase the supply of rental housing by offering tax breaks to investors if they build such properties.

Ms O’Neill said the bill would make renting “more affordable and give tenants more choice by increasing institutional investment in the rental stock”.