SMSF investors looking at new homes amid pandemic
Self-managed super fund (SMSF) investors rattled by the financial market turmoil caused by the coronavirus (COVID-19) pandemic are turning to new residential real estate for capital growth, according to Queensland-based property developer.
Since COVID-19 hit the global economy, KDL Property Group Managing director Kent Leicester has seen a significant increase in inquiry for residential housing projects, particularly from SMSF investors.
According to him, the company has experienced a similar pattern of SMSF investors looking to invest in new residential homes during the global financial crisis (GFC), which highlights investors’ desire to stabilise their funds by putting some of their money into new residential property.
Latest figures released by SuperRatings showed that the average Australian super balance was down just over 8.0 per cent since the start of the year but has since recovered some of the value lost after the impact of the COVID-19 restrictions, he said.
“We saw a similar trend post-GFC with a surge of interest in securing bricks and mortar. People in SMSFs are usually home owners themselves and they see the value in residential property over the long-term,” Mr Leicester highlighted.
“The attraction of new homes on freehold titles is the potential for higher cash flow compared to apartments and townhouses, as well as no body corporate levies.”
SMSF investors are now looking to invest in new homes in growth areas, including two residential land estates in Logan, south of Brisbane, which is currently considered a hotspot for good capital growth.
KDL’s Montana Logan Reserve features 93 residential home sites with an array of entertainment, shopping and recreation close by. Nevada Park Ridge features 80 blocks close to unspoilt bushland.
According to the property developer: “KDL’s $22 million Montana Logan Reserve estate and the $19 million Nevada Park Ridge project offer investors the opportunity to purchase already completed new homes in vibrant communities popular with families and young couples.
“KDL has built these new homes and we work with local property managers to secure tenants for the properties with rental guarantees over the next 18 months.
“Lower yields are currently on offer for investors in Sydney and Melbourne property compared to residential real estate in South East Queensland.”
Despite the severe economic impact of the COVID-19 pandemic, Mr Leicester remains positive about the SEQ property market while interest rates remain at record lows.
“It is still an excellent environment to enable investment in the recovery phase and property will be a safe haven with the share market experiencing so much volatility,” he concluded.
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