Australian Institutional Investors and Residential Investment Vehicles
A lack of institutional investor involvement in the private rental residential sector is a structural weakness in the Australian housing rental market. To encourage institutional investment in the private rental market, several residential investment vehi
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Australian Institutional Investors and Residential Investment Vehicles Chyi Lin Lee, Graeme Newell and Valarie Kupke
Abstract A lack of institutional investor involvement in the private rental residential sector is a structural weakness in the Australian housing rental market. To encourage institutional investment in the private rental market, several residential investment vehicles such as REITs have been introduced in the US and internationally. Despite Australian REITs being the second largest REIT market in the world, no residential REIT vehicle is available in Australia. Therefore, it is not only essential to assess the attitudes of Australian institutional investors regarding housing investment, but also residential investment vehicles. A survey of Australian institutional investors concerning residential property investment was conducted in August-September 2014. The results showed that the lack of well-structured residential investment vehicles and low returns were seen as critical issues in the residential property market. In addition, the most desirable features for an effective residential investment vehicle were being managed by an experienced manager, a diversified portfolio by location and delivering stable income returns with low debt. The implications of the findings are also discussed.
Keywords REITs Unlisted residential funds Private rental market Residential investment vehicles Institutional investment and Australia
C.L. Lee (&) School of Business and Urban Research Program, Western Sydney University, Penrith, NSW, Australia e-mail: [email protected] G. Newell School of Business, Western Sydney University, Penrith, NSW, Australia V. Kupke School of Commerce, University of South Australia, Adelaide, SA, Australia © Springer Science+Business Media Singapore 2017 Y. Wu et al. (eds.), Proceedings of the 20th International Symposium on Advancement of Construction Management and Real Estate, DOI 10.1007/978-981-10-0855-9_62
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Introduction
A clear decrease in housing affordability among Australians has been observed in recent years [18]. The recent report from the Council of Australian Governments confirmed that only a relatively small proportion of homes sold were actually affordable to low-income households [7]. With increasing housing stress in the home purchase market and a limited supply of housing, many potential home purchasers have to seek private rental accommodation. This also pushed up the demand for private market properties [2, 27]. The demand for private rental properties has increased significantly in recent years. In 2014, it was estimated that the Australian private rental market included 2.4 million rental dwellings with 6 million residents across Australia [1]. In 2011–2012, almost 25 % of Australian households rented privately [1]. More importantly, the market grew by 11 % over 2001–2006 [26]. These figures have clearly demonstrated the significant role of the private rental market in the Australian housing sector. To meet the deman
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