Australian pension funds with A$520 billion AUM keen to deploy to real estate

TWO of Australia’s biggest pension funds that together count A$520 billion (S$436 billion) in assets under management (AUM) said they have money they can pump into real estate investments.

“Do we have additional allocation to real estate? Yes, we do... we do have dry powder,” said Mark Lee, senior portfolio manager and head of real estate at Australian Retirement Trust (ART), at the recently concluded Private Equity Real Estate Asia Summit 2025 in Singapore last week.

The company is Australia’s second-largest pension fund and manages A$330 billion in retirement savings, known locally as superannuation. Of that amount, around A$15 billion is invested in real estate.

Lee said that generally, ART’s “dry powder” consists of around A$2 billion on the equity side a year. As for geographical allocation, Australia accounts for about half of ART’s total investment in real estate, while another 35 per cent is in the US, with as much as 7.5 per cent directed to Europe and Asia. ART is close to reaching these targets, he added.

Aware Super, another Australian pension fund with a total AUM of A$190 billion, of which A$12 billion is deployed to property, also said it still has capital to allocate.

In particular, it is looking to step up its diversification efforts away from its home market.

Anjana Moran, senior portfolio manager at Aware Super, said at the same conference that 75 per cent of its property investments are in Australia, with the rest offshore – mainly in the UK and Europe.

Diversifying out of Australia

“We want to see that shift to 60 per cent in Australia and 40 per cent in the rest of the world,” she added.

As part of that diversification drive, Aware Super opened its first offshore office in London in October 2023, with six staff. ART followed in April 2024.

Other Australian pension funds said they plan to pump up their investments in the UK.

Collectively valued at A$4.2 trillion, Australia’s retirement plans represent the world’s fourth-largest retirement savings pool.

IFM Investors, a Melbourne-based provider of investment services, said Australian pension funds are likely to double their investments in the US to exceed US$1 trillion by 2035 from US$400 billion currently.

That is despite the challenges in navigating the current geopolitical landscape.

“Every day, I’m trying to figure out what’s going on in the US and where the bond yields are,” said ART’s Lee. While the pension fund would prefer to take a more offensive investment stance this year, “the noise makes it very difficult... but we are quite comfortable playing defence”.

Referring to geopolitical “noise” and uncertainty caused by US President Donald Trump’s various statements regarding tariffs, Moran said: “We don’t know what’s bluster versus what’s actually going to happen”.

Aware Super maintains a long-term conviction in living and industrial sectors, she added.