Investors with self-managed superannuation funds (SMSFs) looking to diversify into property investment now have direct access to prime Sydney office space with tenants in place, the purchase of which can be completely financed through superannuation.
As a result of last year’s changes to the Superannuation Industry (Supervision) Act 1993, SMSFs are now able to borrow funds for investment in property, within strict guidelines.
A heritage office building in the centre of the Sydney CBD (250 Pitt Street), which has tenanted office suites for sale, has been attracting increasing interest from SMSFs. “SMSFs can now access loan products which allow lending up to 70% or more of the purchase price of office suites at 250 Pitt Street,” said Ray Burkett from 250 Pitt Street.
“We’ve been hosting a series of seminars about opportunities that are now open to SMSFs, and there is genuine interest in learning more about how you can now leverage equity from your super into direct property investment.”
Burkett said the long-term outlook for using super to invest in commercial property is favourable. “Commercial property traditionally offers higher yields and longer tenancies than residential property, and currently there is a tightening of office stock supply in Sydney’s CBD,” he said.
“There are no new commercial strata projects in the Sydney CBD and the amount of available stock is minimal, so the long-term growth of 250 Pitt Street is particularly favourable.
“With the tax benefits available when investing via your superannuation, SMSFs can potentially benefit from 35% better returns over a 20-year period compared to conventional direct property investment, making this a great vehicle for SMSFs to make use of their equity.”
There is also the opportunity for investors to lease a suite purchased by their own SMSF, he said. “The obvious advantage here is that the owner of the strata office knows a reliable tenant is in place, and they’re building their own retirement nest egg rather than someone else’s.
“It’s something we expect to see more of as people become more aware of how the changes in legislation increase the opportunities available to SMSFs.”
Suites available at 250 Pitt Street range in price from $170,000 to $650,000, with sizes from 23m2 up to 58m2 throughout the 12-level building.
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