By Nick Hedley
Australian Retirement Trust (ART), one of the nation’s
largest superannuation funds, has partnered with institutional investment
manager QIC to fund new social and affordable housing projects in the
northeastern state of Queensland.
Housing affordability is an ongoing issue in Australia that
has worsened since the start of the pandemic. According to a recent study by
financial services groups ANZ and CoreLogic, the portion of household income
required to service new mortgage repayments reached 41.4% nationally in March,
well above the decade average of 36.5%. Rentals have also increased
substantially, partly because of limited supply, the study shows.
Super funds have seen this as an opportunity to solve the
housing crisis while also delivering returns for their members. Two years ago,
AustralianSuper bought a 25% share in Melbourne-based affordable housing developer
Assemble Communities, for instance.
ART said in a statement that it and QIC would work with community
housing provider Brisbane Housing Company on a new venture aimed at providing “a
scalable model for the financing, development and operation of social and
affordable housing.”
Up to 1,200 new homes will be built in Queensland under the
partnership, which will also source funding from the state government. The
first two projects are expected to be complete in 2024.
This is ART’s first social issue-focused investment since it
was formed in a merger between Sunsuper and QSuper earlier this year. The super
fund plans to invest up to AU$150 million (US$104 million) for a subordinated
debt tranche, with QIC as investment manager.
“As one of Australia’s largest superannuation funds, we’re
committed to helping solve problems for our community and society, while not
compromising on our fiduciary duty to our members, and this project is one example
of that,” ART’s head of sustainable investment, Nicole Bradford, said.
“We believe this investment opportunity will support more
affordable housing in Queensland, while also maximizing the real, long-term
investment returns for our more than 2 million members.”
Michael O’Brien, managing director of QIC Real Estate,
said the initiative was a “response to Queensland’s current housing issues.”
“This unique partnership between ART, the Queensland government
and QIC, together with Brisbane Housing Company, has created a significant
opportunity for institutional investment into social and affordable housing in
Queensland,” O’Brien said.
BHC CEO Rebecca Oelkers, said: “This program is an exemplar
of how state governments and institutional investors can work together with the
community housing sector to raise capital and deliver social and affordable
housing at scale.
“It will change the lives of countless Queenslanders who are
in dire housing need,” Oelkers said.
Meanwhile, industry players argue that super funds could do
more to address the crisis – if the government offered the right incentives.
In a 2021 report, Frontier Advisors said institutional
investors did not qualify for the capital gains tax discounts available to
individuals in this segment, among other issues.
“Australia’s affordable and social housing asset class is
lacking the necessary government support, in terms of tax treatment, to
generate acceptable returns for investors,” Victoria Weekes, deputy chair of St.
George Community Housing, said in a recent post published by the Association of
Superannuation Funds of Australia.
“Making progress to attract the super funds will require a
coordinated approach from all levels of government to ensure that tax,
regulatory policy or financial incentives focus on scalable development
opportunities,” Weekes says. “Without attractive scalable investment
conditions, the impact will be limited.”