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.”