The ever-growing Sydney developer <a href="https://www.apartments.com.au/developers/deicorp">Deicorp</a> has commenced construction on its third project this year.

The new $640 million development, <a href="https://www.apartments.com.au/new-apartments/falcon-alexander-8-alexander-street-crows-nest">Falcon &amp; Alexander</a>&nbsp;in Crows Nest, is Deicorp's&nbsp;first foray into Sydney’s Lower North Shore and will deliver 188 apartments in a new landmark building, with 48 dedicated to Affordable Housing.

Since December, <a href="https://www.apartments.com.au/builders/deicorp-construction">Deicorp</a> has commenced construction on four projects in total that will deliver over 2,000 homes, maintaining their track record of quickly converting development approvals into commencements.&nbsp;

<img alt="Falcon &amp; Alexander" data-entity-type="file" data-entity-uuid="f17b79a0-db7b-48bc-835f-e9b3e3117561" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-07-28%20at%203.55.13%E2%80%AFPM.png?VersionId=.UKl.uSBs9zOeElc6jNUeuBB8EMAD5HP" />

&nbsp;

Located a five-minute walk from the new Crows Nest Metro station, prominently positioned at The Five Ways on Pacific Highway, Falcon &amp; Alexander will deliver an exclusive collection of architecturally designed one, two and three-bedroom apartments, with prices starting from $1.3 million.

Conceived by award-winning architects <a href="https://www.apartments.com.au/architects/turner-studio">TURNER</a>, Falcon &amp; Alexander will create a vibrant vertical village in the heart of one of Sydney’s most connected neighbourhoods. Thoughtfully arranged around a central atrium and lush communal gardens, residences will enjoy panoramic views over Sydney Harbour and the Lower North Shore, with interiors designed for modern, light-filled living.

Residents will benefit from premium amenities, including a resident-only skygarden, and boutique retail and dining spaces on the ground floor, all integrated with the local urban fabric.

&nbsp;

With the Crows Nest Metro station just steps from home, residents will enjoy unrivalled connectivity across Sydney’s transport network, placing everything from world-class dining to premier education and healthcare within easy reach.

<img alt="Deicorp" data-entity-type="file" data-entity-uuid="292460e8-2bc9-47c5-8805-cf59570972a2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-07-28%20at%203.55.22%E2%80%AFPM.png?VersionId=UUerYKJzOGzpXyDv1nMlrV_oi6lUyiMS" />

Deicorp Founder Fouad Deiri said Falcon &amp; Alexander marks an exciting new chapter for Deicorp as it expands into Sydney’s Lower North Shore.&nbsp;

“This is a community we deeply respect, and we’re proud to contribute with a project that reflects the character, energy, and potential of Crows Nest,"&nbsp;Deiri said.

“This is an iconic location, and a great location deserves a great design. With Falcon &amp; Alexander, we’re delivering more than just apartments; it will be a new landmark for Crows Next that not only delivers housing but will benefit the community with an activated retail offering."

[smartcode_project_cta:default project_id=135323]

Deicorp Founder Fouad Deiri said Falcon & Alexander marks an exciting new chapter for Deicorp as it expands into Sydney’s Lower North Shore

Joel Robinson

Deicorp breaks ground at Falcon & Alexander, Crows Nest apartments

One of the primary characteristics of a university campus is its location in high-amenity, well-connected suburbs, as it caters to the thousands of students who walk through its doors every day.

It’s this enviable central location that makes Hamton’s newest neighbourhood so appealing to discerning buyers. The 1.6-hectare site was formerly home to a University of Melbourne campus.

This relocation paved the way for <a href="https://www.apartments.com.au/developers/hamton">Hamton</a>, best known for their $3 billion joint venture development Moonee Valley Park, a vibrant new residential community emerging around the Moonee Valley Racecourse.

[smartcode_project:default project_id=149097 project_image_fid=327680]

<a href="https://www.apartments.com.au/new-apartments/scotch-hill-gardens-hawthorn-147-robinson-road-hawthorn-vic-3122">Scotch Hill Gardens</a> benefits from excellent transport connections and local amenities, further enhanced by the revitalisation of Bills Street delivered as part of the development. Thanks to its history as a university campus, the site is within five minutes of Glenferrie and Auburn Villages and 10 minutes to Kooyong Station.

In addition, the site lies within the prestigious Scotch Hill catchment, which includes highly sought-after educational institutions such as Scotch College, Bialik, and Auburn Primary and Auburn High. This makes it an attractive location for both young families and working professionals.

Understanding that the location would appeal to owner-occupiers, particularly rightsizers and downsizers, Hamton focused on creating a collection of residences tailored to this demographic. The design prioritised community over density, with a series of low-rise buildings nestled within nature.

[smartcode_project:default project_id=149097 project_image_fid=327652]

The development retains 77 established trees on the site and will add a further 151, creating a unique topography visible from the upper levels of the building. A collaboration between placemaking specialists Woods Bagot and landscape architect Tract, the design dedicates over 40 percent of the 1.6-hectare site to landscaped green open space, seamlessly woven between the low-rise buildings.

Landscaping subtly defines boundaries between public and private zones, ensuring a harmonious blend of spaces.

[smartcode_project:default project_id=149097 project_image_fid=327686]

Inspired by nature, the masterplan reflects the organic formations of lily pads on a pond, discreet yet interconnected, sitting lightly within their context. Following the principles of “nature-based cities,” the site integrates nature, amenity, wellness, and community.

This commitment to nature complements the already well-established landscape nearby. Adjacent to Gardiners Creek, the site offers both recreational and ecological benefits, while the Yarra River trails, Patterson Reserve, and Hawthorn Velodrome, further enhance the area’s outdoor amenities.

[smartcode_project:default project_id=149097 project_image_fid=327694]

Residents will have access to a range of facilities, including a bathhouse with wellness amenities, a gym, co-working spaces, and communal dining and lounge areas.

Hamton will announce a builder in the coming months. Demolition of the old Campus is underway with construction on the first stage, anticipated to commence early 2026.&nbsp;

[smartcode_project_cta:default project_id=149097]

Scotch Hill Gardens, a new life for the former University of Melbourne Hawthorn Campus

Brisbane-based developer Red &amp; Co. is venturing into the Gold Coast apartment market, spending $8 million on a vacant site in Varsity Lake.

The plan is to developer 156 apartments on the 2,857sqm, 22 Lake Street site, near Varsity Central Park.

Colliers Queensland Residential Development Sites Director Troy Linnane said Colliers had been &nbsp;working closely with Red &amp; Co. to help them secure their first Gold Coast site, with this site offering a great opportunity due to its location and existing approval.&nbsp;

“This off-market transaction highlights the value of strong market knowledge and relationships, we were able to align the right buyer with the right site given the relationships we have with many active &nbsp;developers seeking sites across the SEQ market,” Linnane said.&nbsp;

“Those groups with in-house construction capability or strong builder alliances are leading market activity as they are best positioned to deliver projects in the current market."

Linnane said with&nbsp;confidence strengthening in 2025, they are seeing increased competition for prime development sites.

“Developers are actively seeking well-located sites, to take advantage of the under supply of &nbsp;apartment stock and the significant uplift in revenues due to strong buyer demand."

<img alt="22 Lake St" data-entity-type="file" data-entity-uuid="fcd9176e-4e38-4519-a868-0748419c1d2b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/22_Lake_Street_001.jpg?VersionId=Z7tUSkVLqv8qf.JTyMXmzasxvudP_u2p" />

Colliers Queensland Residential Site Sales Executive Jackson Robinson said the transaction reflected confidence in the market and increasing demand for well-located, DA-approved sites to develop into &nbsp;housing.&nbsp;

“Red &amp; Co. recognised the depth of unmet demand for well-priced apartment stock on the Gold &nbsp;Coast, particularly in sought-after suburbs like Varsity Lakes, which offers excellent connectivity, expansive views and close proximity to major employment and education hubs,” Robinson said.&nbsp;

There will be a mix of one-, two-, and three-bedroom apartments, with views over&nbsp;Lake Orr and out to Burleigh Headland and the Hinterland, with additional outlooks north towards the Broadbeach skyline.&nbsp;

Red &amp; Co., led by co-founders Keiran Foster and David Laverty, have previously completed several developments across Brisbane.

Red & Co.’s first acquisition on the Gold Coast demonstrates increasing  confidence in the Gold Coast market

Red & Co. plots new Varsity Lake apartments

There’s no slowing down Gold Coast builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/immerse-projects">Immerse Projects</a>.

Led by construction industry veteran John Kearney, the developer has made its move into the Brisbane apartment market, securing a prime site on Sylvan Road in Toowong.

It’s a location filled with nostalgia for Kearney, who studied at the nearby University of Queensland.

"It feels like a full circle moment," Kearney told Apartments.com.au.&nbsp;

“I spent many nights at the Regatta Hotel just down the road — as have most people in Brisbane. It’s one of the city’s most well-known hotels, and with several cafes, restaurants, and a CityCat stop nearby, it’s become an even more attractive place to live.”

Kearney describes Toowong as a suburb with real depth.

"The suburb attracts everyone, from students to retirees, and that's what makes it interesting."

He also noted the opportunity to take advantage of significant view corridors from the new development site: across Toowong Memorial Park, north to the city, and east along the Brisbane River.

CBRE’s Will Carman and John Nucifora brokered the sale of the 1,760 sqm site, citing strong demand for strategically located development opportunities in Brisbane’s inner suburbs.

"Its proximity to transport, retail, and educational facilities made it an opportunity of strong interest to the broader development community," Carman said.

<img alt="22-24 Sylvan Road" data-entity-type="file" data-entity-uuid="49eb466f-69dc-4790-8d50-5173d0cf104a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/22-24%20Sylvan%20%20Rd%20Toowong_Markups.jpg?VersionId=u4_IGzpYLPFfAZSsgCZynov3bm7umwJ." />

Nucifora said the acquisition reflects confidence in <a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a>, and more broadly Brisbane, as a market of strength for integrated builder developer groups.

"Those with an integrated model, or with strong existing relationships with builders have continued to be at the forefront of development acquisitions over the past two-year period."

Kearney has long operated Greyburn Constructions, and recently expanded into multi-residential development, with great success. They've delivered a new project in Kirra, and they're currently working towards completion at&nbsp;Ombre Robina. Then they have a new project in Kirra, on Haig Street.

They will submit a development application for Toowong later this year.&nbsp;

It’s a location filled with nostalgia for Kearney, who studied at the nearby University of Queensland.



First look: Immerse Projects moves into Brisbane apartment market with Toowong site acquisition

A track record of delivering new projects not just across the Sunshine Coast, but in <a href="https://www.apartments.com.au/developments/bokarina-qld-4575">Bokarina</a> specifically, gave builder-developer <a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a> (GVG) all the IP needed to make Bask even more refined.&nbsp;

After completing Zinc Bokarina last year - positioned directly adjacent to Bask - GVG leveraged years of feedback from original purchasers and current residents, enabled by its community-focused approach and ongoing engagement.

[smartcode_project:default project_id=141609 project_image_fid=333359]

The feedback pointed to two clear themes: larger apartments with more bedrooms, and amenity suited to the active downsizer.

GVG then designed <a href="https://www.apartments.com.au/new-apartments/bask-bokarina-38-bokarina-boulevard-bokarina-qld-4575">Bask</a> - a collection of one to four-bedroom apartments - tailored to the end user: local downsizers or those seeking more spacious holiday homes than a compact getaway by the beach.

[smartcode_project:default project_id=141609 project_image_fid=333361]

A pool was essential, but a lap pool wasn’t. Instead, GVG designed a heated plunge pool, ideal for a refreshing dip. Key to the amenity offering were shared spaces designed to foster community connection. These include shaded garden areas with barbecue facilities, a firepit zone, and a communal herb and vegetable garden.&nbsp;

There’s also a fully equipped gym, designed specifically for the lifestyle exerciser.&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=333365]

Another key insight was the desire not just for pet-friendly living - but for a development that embraces it. GVG listened and installed a dedicated dog wash bay, perfect for rinsing off after a trip to the dog-friendly Bokarina Beach, just 250 metres from Bask's front door.

Having already helped establish a vibrant lifestyle precinct with retail and amenity at Zinc, GVG is now expanding the offering with more street-level retail, set to complement the existing restaurants, wine bars, convenience, and specialty stores in the precinct.

[smartcode_project:default project_id=141609 project_image_fid=333362]

Bask represents the final new residential offering in the Bokarina Beach precinct. The two buildings, Mydas and Caretta, have been cleverly designed so that every apartment captures glimpses of either the Pacific Ocean, Lake Kawana, or the Glass House Mountains.&nbsp;

Construction is already underway, with GVG expecting residents to move in by summer 2026/27.

[smartcode_project_cta:default project_id=141609]

How GVG is designing for the active downsizer at Bask Bokarina

Asset Management

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GUEST OBSERVATION
The Financial Services Royal Commission spent the last couple of weeks uncovering misconduct in the superannuation industry. But as we clean up superannuation we should also fix another deficiency – the need to provide life-long incomes for retirees.
A recent survey found a third of Australians over 80 had run out of money. The rest want reliable life-long incomes. Funnily enough, there are many projects that need funds and can produce cash flows for decades – infrastructure particularly.
Superannuation funds are increasingly making infrastructure investments themselves. What is needed is a way to link the long-term cash flows derived from physical assets straight through to pensioners.
Investment markets are currently too conflicted to do so.
The status quo
Companies, and even governments entering long term projects mainly use short-to-medium-term bank loans to fund their activities. These loans must be refinanced regularly.
For reasons that the Financial Systems Inquiry could not explain, companies often borrow overseas and so are subject not just to the risk of changing interest rates, but also to fluctuating foreign exchange rates.
To reduce these risks they may enter into sophisticated hedging programs, but this only serves to move risk elsewhere in the financial sector.
Banks, which provide short term finance for long term projects, suffer regular liquidity crises when depositors want to withdraw their money. An IMF report records 129 crises in the 40 years before 2010.
<img src="https://images.theconversation.com/files/232240/original/file-20180816-2903-1ufngwx.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Banking crises.
At the same time, about 70% of superannuation benefits are taken as “account-based pensions” – regular income streams that the pensioners draw down to pay their expenses.
This money has been invested in thousands of investment options, all of which provide liquidity so that pensioners can sell assets at any time.
But if the money is taken as regular monthly income, all of this liquidity is unnecessary – the funds could have been invested in something that produces monthly cash flows.
The alternative
Consider, for instance, a large infrastructure project that will generate revenue over 50 years, increasing over time more or less in line with inflation.
One could design a financial instrument that paid investors a fixed proportion of that revenue. If the investors were superannuation funds, they could issue annuity contracts that paid out these cash flows to pensioners for life.
The borrowers would face lower risks, as their repayments move together with their revenue. Both borrowers and investors would be unaffected by changes to interest rates or the market value of investments.
Why hasn’t this already been done? It is not that the cash flows from long-term investments are insufficient. They currently exceed all private and public pensions.
These kinds of financial instruments are already used on a very small scale in Australia.
The major obstacle to their wider use seems to be that the financial sector feeds off the excess liquidity in the market. Banks make money by rolling over short-term loans. Investment managers, stockbrokers and exchanges make money by trading superannuation assets.
The whole sector operates under a paradigm where liquidity is paramount. So they fail to address the risks this presents to banks, economies and to retirees.
It is not that people do not like these “life annuities” when they are explained appropriately, but that their advisers and other experts active in the financial sector at best ignore them and at worst actively discourage them (by emphasising the “need” for liquidity).
The ongoing problems of the financial sector must surely make us ask whether it is fit for purpose? Or, at least, how well is it fulfilling its functions of allocating capital and managing risks?
We need appropriate pipes to ensure the cash generated by long-term assets flows through to fund pensioners. What we have instead is a flood of liquidity, which regularly buffets not only the financial sector but the entire economy.
The impetus to fund both long-term projects and life-long pensions must ultimately come from superannuation fund trustees. They appoint those who select assets and must set up the systems to ensure the cash flows are paid to pensioners.
To do this, they must first free themselves from the paradigm that liquidity is paramount. They then need to employ people and consultants whose loyalty is to the members and not the investment markets.
They will have to set up structures to be able to evaluate the soundness of new projects, and secondary markets to allow for trading as necessary. Government and regulators will have to permit funds to collaborate in this process.

Trustees will also need to take the lead and give members access to annuity products, and disinterested and expert advice as to when these are suitable.
Anthony Asher, Associate Professor, UNSW
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/superannuation-trustees-should-find-long-term-assets-for-their-pensioners-101370" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Superannuation trustees should find long-term assets for their pensioners: Anthony Asher

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Global real estate investment manager TH Real Estate has appointed Rick Marston as head of asset management in Australia.
Marston will be responsible for asset management strategies and extracting value from real estate investments that TH Real Estate acquires on behalf of its Australian funds and private account clients.
He brings over 15 years’ experience working in senior positions across the real estate sector, including roles at Grosvenor Estates in London, Dexus and AMP Capital in Sydney, and most recently as associate director at Invesco Asset Management.
TH Real Estate, an affiliate of Nuveen, the investment manager of TIAA, is one of the largest real estate investment managers in the world with circa US$114 billion in assets under management globally.
In Australia, TH Real Estate’s core holdings include a half stake in 101 Miller Street and the Greenwood Plaza in North Sydney, as well as investments in Myer Bourke Street in Melbourne, and a 75% interest in Mount Ommaney Shopping Centre in Brisbane.
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TH Real Estate appoints Rick Marston to key role

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The Swiss AFIAA (Foundation for International Real Estate Investments) has broadened its interest in the Australian real estate market with an “asset swap”. 
The company has bought an office building in Melbourne’s <a href="https://www.realcommercial.com.au/property-offices-vic-melbourne-502382946" target="_blank">628 Bourke Street</a> (above) for its property portfolio for around $181 million. The seller is M&amp;G Real Estate Asia. 
In return, AFIAA has sold its “HQ South” office building at <a href="https://www.commercialrealestate.com.au/property/520-wickham-street-fortitude-valley-qld-4006-2013471731" target="_blank">520 Wickham Street</a> (Fortitude Valley) in Brisbane, which measures nearly 14,000 sqm, to the investor for $119 million. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/AFIAA_BrisbaneHQ.jpg" alt="">
The Melbourne property is in the CBD and offers around 23,400 sqm of office space and 940 sqm of retail space. Both the lift lobbies and individual floors have been renovated in recent months. One of the key tenants is the insurance company QBE.
AFIAA chief executive Ingo Bofinger said the group was planning further acquisitions in central metropolitan locations as part of its growth strategy. 
“The transaction is a prime example for the implementation of our focus strategy: We are investing the sale price received for HQ South of around AUD 119 million in a larger property in Melbourne, where we already have two more properties,” Bofinger said.
“We are eying further potential to increase rents in excellent locations in Melbourne in particular.” 
Potential properties also include real estate with development potential whose value added is to be enhanced by asset management using refurbishment measures.
In Australia, AFIAA also owns properties in Sydney in addition to two other properties in Melbourne’s CBD. 
AFIAA is an investment foundation under Swiss law that invests foreign real estate assets. Forty-five Swiss pension funds currently invest directly in prime foreign properties through AFIAA. The properties in Australia are centrally managed by the AFIAA office in Sydney. 
The legal consultant for the acquisition and sale was Mills Oakley. 
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jonathanchancellor-7SQnKwU6yx

Swiss AFIAA Foundation does an asset swap deal, buys in Melbourne, sells Brisbane HQ to realty investor 

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Altair Asset Management’s move to sell off its entire Australian portfolio of underlying shares in unit trusts citing an impending property market "calamity" and an "overvalued" equity market has been described as an over-reaction by industry executives.
Macquarie Group's former head of real estate business Bill Moss said it was overstated, while economist Saul Eslake was of the view that it was difficult to predict accurately period forecasts of collapses.
Altair’s chairman and investment officer Philip Parker said on Monday the fund had advised clients it would sell "hundreds of millions" of dollars of "underlying shares in the Altair unit trusts and then hand back the cash to those same investors". Interestingly, he has also been named a defendant in a court case brought in by his mother in an unrelated assets case involving his firm. 
“The main reason is in my opinion that there are just too many risks at present, and I cannot justify charging our clients fees when there are so many early warning lead indicators of clear and present danger in property and equity markets now,” he said. 
“I would like to make clear this is not a winding up of Altair, but a decision to hand back client monies out of equities which I deem to be far too risky at this point,” Parker said on livewiremarkets.com.
The risks he listed included the Australian East Coast ‘property bubble’ and its impending correction, China’s property and debt issues later this year, overvalued Australian markets and the unpredictable geo-political situation.
He also made it clear that Altair wasn’t being wound up, but the decision was to hand back client monies out of equities which were deemed “far too risky at this point”.
But Moss was of a different view.
"You could have said that [about China] a long time ago," Moss was cited by saying by Fairfax Media.
Australia's property was experiencing a "one-off adjustment" to yields and values because of "incredible demand" from Chinese investors, Moss said.
"I'm not convinced that it's over. From what I'm seeing, there is still a lot of strong interest from China. I would be looking for the real reason they [Altair] have pulled out," he added.
Meanwhile, Eslake said various hedge funds and economists had in the past predicted a property bust but that he had “always struggled to find credible the period forecasts that there is a collapse around the corner”. 
"Are Australian house prices and household debt high? Yes, of course they are and there are some risks that flow from that."
"But to be a 'calamity' .. you would need some things to occur that I can't see occurring anytime soon," he said.
Montgomery Asset Management funder Roger Montgomery, who knows Parker, told The Australian that his funds may not have had the flexibility to go completely to cash while continuing to manage the money, and he would not have taken the decision lightly.
“You have to give someone a lot of respect for doing that,” Montgomery said. “They are genuinely putting their clients’ interest before their own. They are not taking any fees from it.”
Amid all this, Parker is grabbing more eyeballs, with Fairfax Media reporting that he is one of the defendants named in an action stemming from claims brought by his elderly mother, Faye Mary Parker and F M Parker Pty Ltd.
Faye Mary Parker filed the suit against Attis Capital, its director David Reynolds, and Altair Assets and Pepsec, which is an entity linked to Philip Parker and Altair. 
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Altair Asset fund's total Australian selloff questioned by experts

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
It is received wisdom in the Australian superannuation industry that bigger is better. The theory goes that funds with more assets under management will benefit from economies of scale, because the costs of running a superannuation fund are largely fixed and do not change much, whether you are managing assets of A$500 million or $50 billion.
This means that funds which have more assets under management will spend proportionally less on administration and overheads. This will allow them to make more competitive returns and supposedly give them an edge in the marketplace. The endpoint of this reasoning is that a market’s conditions will be a “critical threshold” when it comes to size.
Any funds smaller than that threshold would be too inefficient and would eventually succumb to the larger and more efficient competition, being either absorbed into a larger fund (to restore economies of scale) or losing members attracted to greener pastures, as the bigger funds could charge lower fees per member.
<h2>But is this true for industry superannuation funds?</h2>
We decided to look into whether it was indeed the case that larger funds have an advantage in economies of scale over smaller funds. In particular, we were hoping to find signs of healthy competition in the superannuation marketplace, as competition helps assure us that the industry is appropriately serving the needs and demands of consumers. Such competition might take the form of strategic mergers between smaller funds, or attempts by larger funds to advertise their relative efficiency and lure away the members of the smaller funds.
Signs of healthy competition are especially important for the superannuation industry, as one of the largest sectors in the economy and a crucial part of our collective ability to finance our retirement. The review used data from industry funds, which disclose this information in annual reports. Retail (for profit) funds do not always disclose this information.
<h2>Comparing administrative efficiency</h2>
In order to work out whether super funds really do benefit from economies of scale, we looked at the largest and the smallest industry superannuation funds. In particular, we compared them based on the proportion of assets under management spent on administration costs each year. If the theory that “bigger is better” is correct, one would expect to find that larger funds spend a far lower proportion of their total assets on administration costs.
One would expect this difference to be especially prominent given the massive size discrepancy between industry superannuation funds: the largest, Australian Super, held over $90 billion in assets in 2015 compared to the smallest fund, Transport Super, with a relatively miniscule $114 million.
When comparing some of the top dogs to a handful of middle-sized industry funds, there seems to be no marked correlation between size and efficiency:
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124413/width754/image-20160530-879-1jmptgw.png" target="_blank">Click to enlarge</a>
<h4>
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124413/width754/image-20160530-879-1jmptgw.png" alt="">Source: Fund annual reports
</h4>
This is very surprising, as these funds do vary by quite a large margin of assets; the two mid-sized funds shown hold about $7 billion each, whereas the two large funds hold over $37 billion and $90 billion.
To further check these results we decided to compare a handful of the largest funds to the five smallest. At first glance, this comparison seems to confirm the “bigger is better” theory:
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124414/width754/image-20160530-10041-3xm71g.png" target="_blank">Click to enlarge</a>
<h4>
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124414/width754/image-20160530-10041-3xm71g.png" alt="">Source: Authors
</h4>
However, when we look past these averages at some of the individual funds (both the largest and the smallest), a much more interesting picture emerges: some of the tiniest funds (in solid lines) seem to be just as cost-effective as the very largest (the dashed lines).
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124415/width754/image-20160530-864-pk9vqg.png" target="_blank">Click to enlarge</a>
<h4><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124415/width754/image-20160530-864-pk9vqg.png" alt=""></h4>
<h4>Source: Fund annual reports</h4>
<h2>A potentially embarrassing situation</h2>
These findings run in stark contrast to prevailing wisdom about the superannuation sector and indeed the classic economic theory of economies of scale. Not only do the biggest funds have no discernible efficiency advantage over the much smaller mid-sized funds, but there are some positively tiny funds which are just as efficient as some of the very largest.
What is going on here – is this merely some market aberration, or are some smaller funds putting up a heroic David-and-Goliath struggle against their competitors? The question for the big funds is why they have no efficiency advantage over their smallest competitors, and what steps they ought to be taking to rectify a potentially embarrassing situation which has been in place for many years.
<h2>Data</h2>
The data-set used for this article consisted of the financial information of the 14 largest and 5 smallest industry superannuation funds, as ranked by APRA’s statistical publications. The data as to the level of administrative expense came from the annual reports of the superannuation funds. An overview of the funds and the size of their assets is shown below.
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124416/width754/image-20160530-903-21i56.png" target="_blank">Click to enlarge</a>
<h4><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/124416/width754/image-20160530-903-21i56.png" alt=""></h4>
<h4>Source: Fund annual reports</h4>
Rob Nicholls is lecturer, UNSW Australia, and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/rob-nicholls-91073" target="_blank">here</a>.
This piece has been co-authored with Veevek Doolabh, a final year undergraduate law student at UNSW.
 
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