Superestate, the superannuation fund giving its members the opportunity to get into the property market

Feature Article

Sydney, NSW, Australia

Owning a slice of real estate is an aspiration shared by millions across the country – for many though, especially millennials, the dream of investing in property has seemed just that, an unachievable dream.

Enter Superestate: Australia’s first regular super fund to focus on investment in residential property. Through its property-focused model, Superestate is transforming both the superannuation industry and the model of property investment as we know it.

Put simply, Superestate allows its members to invest in property through their superannuation. Superestate was founded by former investment banker Grant Brits, with Dr Andrew Wilson, formerly Chief Economist at Domain Group and Damien Cooley, founding director of Cooley Auctions and one of Australia’s most sought-after auctioneers, rounding-out the investment team. Grant was driven by the belief that everyone should have the ability to invest in property and not miss out on having a foot in the door due to their financial position.

‘Anyone who lives in our major cities will know how hard it is to get onto the property ladder. I saw many friends and family struggling with the reality that they might never manage to buy property.’ he says. ‘We saw an opportunity to help people invest in something that they care about and also understand.’ Another, more technical, driver is performance. ‘Residential property has actually outperformed our stock market over the long-term’, Grant explains. ‘However, super funds continue to ignore residential property as an investment. We don’t think it’s fair that only those who are already on the ladder should benefit!’

While the Superestate members range in age from their teens to their 60s, it has proved particularly attractive to millennials, who are typically considered the generation left behind by the property boom. Not only does it offer an otherwise-unachievable chance to enter the property market, but property is also something that most people can relate to. Superannuation, especially for young people, tends to be something given little thought, in part due to the fact it is it neither highly visible nor tangible.

Grant recognises that ‘It’s hard to get excited about something you can’t see, feel or touch. The super industry has thrived off a lack of understanding by the general public. Basically, we’ve seen that most people are just too scared to even look into their super at all! We think that by giving people the ability to invest in something they understand – residential property – that we hope we can empower them to take control of their super. We really hope that we can finally give people a super product to care about!’.

63 Stafford Street, Stanmore, is a prime example of the Superestate model in action. Selling for $1.755 million in June 2018, it is a property that would be out of reach for most people to even consider purchasing as an investment. Even if it were bought as an investment property, 63 Stafford Street alone would not represent a balanced, diverse investment portfolio. With Superestate, however, this property becomes the first part of a diversified portfolio of properties in both blue-chip and rapidly gentrifying suburbs. ‘It’s a great representation of inner-city Sydney. It is an architecturally unique property that maximises all of its elements. It is the type of property that many Sydneysiders would love to own or live in. We saw this at the property’s open home (for rental), there were multiple parties through the house and we managed to secure tenants after only a single open home’, says Grant.

There is, of course, an art to investing in property, so Superestate has also attracted those who recognise the benefits of an experienced team managing the portfolio. This is partly why the superannuation industry has neglected property, says Grant. ‘It is a difficult and intensive asset to invest in. It takes a lot more time and energy to buy a house than it does to allocate funds to financial products listed on the stock exchange. Our team has to research, identify, inspect, complete due diligence and negotiate deals all before we even consider buying a property.’

With an experienced and skilled team putting the effort in, however, the rewards are there for the taking. As Superestate does not use any debt to invest, Grant explains ‘this means our members benefit from both the rental income and any future capital gains – imagine how much property in Sydney will cost in 2050… and now imagine if you were also receiving rent every week between now and then! It adds up to a huge sum of money.’ The benefits of the Superestate approach go beyond the rate of return, as not only do members have the benefit of the team working on their behalf, unlike other property investments members are not locked in to anything, meaning they can join or leave the fund at any time without the any of the hassle involved in the traditional model of buying and selling real estate.

Grant says the experience has been incredibly fulfilling. ‘Taking members through the house has been such a rewarding experience. We’ve been able to take people through the house who thought they might never invest in property. Seeing people actually get excited about their super (and financial future) is so good to see. We think people have a lot of comfort knowing their super is invested in bricks and mortar. It’s real and they know that it can’t simply disappear or go to zero overnight.’

As the nature of work and the property market continues to change, lateral approaches like this will be increasingly significant for ensuring people, especially young people, are not left behind. By lowering the barrier to entry, with all employees receiving superannuation contributions and joining taking just a couple of minutes, Superesate is truly transforming the way we approach both superannuation and property investment.