Australian pension funds face A$4-5 bn ($2.6-3.3 bn) in losses on unlisted property this year, research firm Chant West said, hurting an industry already reeling from tumbling share prices and lost confidence.
The potential write-downs come after Australia pension funds have posted the world’s third-largest pension losses among rich countries between January and October last year, shaking confidence in Australia’s compulsory retirement-savings scheme.
'The value of assets will come down. The value of the property is overstated by about 16%,' Warren Chant, principal of Chant West, said on Wednesday.
He forecast a rise of 1% in cap rates, or yields, on A$30bn worth of unlisted property held by pension funds this year, reflecting assumptions of a fall in values.
The Times (Johannesburg)