One of Australia’s largest property investment funds has given a $1 Billion dollar cash injection into a US affordable housing scheme due to the lack of property investment opportunities in the homeland.
Daryl Browning, CEO of Industry Superannuation Property Trust (ISPT) has said that the individual Australian is not investing directly, it’s the superannuation funds and investment houses doing it for them through lack of choice.
“It’s not a deliberate ploy,” Mr. Browning said.
“I think there just hasn’t been the opportunities to do it in Australia.”
The one reason people invest is for profits and it is the job of investment houses to go where the money is, so if there is money to be made in the U.S affordable housing market then so be it.
“In Australia, the scale hasn’t been there and the returns haven’t been there, so it hasn’t attracted institutional scale investment as yet,” Mr. Browning said.
Treasurer Scott Morrison knows that there is a shortage of affordable housing in Australia which is causing investment to go overseas, which is not just limited to the U.S.
“Australian super funds are investing in affordable housing in the UK,” he said.
The Treasurer said he hoped his housing affordability package with investment incentives and a 60 per cent discount on capital gains tax for community housing projects would start to redress the imbalance.
“There is capital available to invest in these projects but in Australia, we haven’t seen that at the scale that we have in other countries,” he said.
Michael Lennon, the managing director of Housing Choices Australia which provides 3,000 properties to those in need, welcomed the package but said it must go further.
“What we have to focus on is supply targets,” he said.
Mr. Lennon believes current negotiations to replace the National Affordable Housing Agreement will be crucial for the future.
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“That will specify contributions to be made by Commonwealth, state governments, and the market and we say should also set targets for the growth of the community housing sector,” Mr. Lennon said.
Mr. Browning hopes the investment in the United States will ultimately lead to more affordable housing in Australia.
“It should be seen as a positive because the experience of the successful investment in the model in the US has, I think, led people to create interest in a similar product and opportunity in Australia,” he said.
Mr. Browning said there was plenty of money ready to be invested in Australian affordable housing if the Government pulled the right levers, but he warned the consequences of getting it wrong would be dire.
“The risk is we’re going to face a massive social problem five,10, 15 years out,” he said.
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