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Commercial property good for SMSF retirees

Commercial property can play an important role within SMSF portfolios for the increasing number of trustees moving from the accumulation phase into the retirement phase of their lives, an SMSF technical expert has said.

Speaking at a Charter Hall Property roundtable, SMSF Association professional and technical standards director Graeme Colley noted returns from commercial property were currently around the 7 per cent to 8 per cent mark, which he regarded as being good for a long-term investment.

“Why would I think around about that sort of return would be good? We ‘re moving in Australia from an accumulation culture, I think over the next five to 10 years, into an income stream culture I suppose or retirement income culture,” Colley said.

“The reason why I say that is we’re not only seeing a number of reviews of the government wanting to move into that area and think about longevity and all those sorts of things as an economy we will be faced with, but we need to complement that with the types of investments that ensure there is long-term returns there.

“There are long-term returns out of commercial property [and] … higher returns from what you can expect from domestic property.”

He added the asset allocations among SMSF trustees would indicate the bulk had already recognised how valuable an investment in commercial property could be.

“We’re looking at around about a total investment of 15 per cent of the total pool of self-managed superannuation fund investments [assigned to property],” he said.

“Of that you might think there’s so much talk in the media about domestic property, the majority of that must be in domestic property, but that’s quite incorrect.

“In fact, 80 per cent of the investments of self-managed superannuation funds are in commercial property.”

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