AUSTRALIA'S superannuation funds are expected to directly invest nearly $8 billion in overseas property by 2020 - about 10 per cent of all super investments likely to flow offshore, according to Jones Lang LaSalle. With super fund assets under management expected to top $3 trillion by 2020, a total of about $80bn would be available for offshore investment ($11bn a year), with 10 per cent expected to be spent on property, it said in a report on offshore investment released yesterday. Some of Australia's largest super funds have declared their overseas intentions, including AustralianSuper (which last year opened an office in Beijing), Q Super, Queensland Investment Corporation and the commonwealth Future Fund. AustralianSuper head of property Jack McGougan said the fund would look to extend its exposure to offshore property from 7 per cent of its total portfolio to 20 per cent in the next three years. "At the moment, returns in the Australian market are probably as good as you will get anywhere in the globe," Mr McGougan said. However, we do recognise that for the sort of properties we are seeking we are going to have to cast the net wider and have a capability of investing offshore. AustralianSuper had mandated Henderson to look for direct investment in the British market, Mr McGougan said. QIC has tuned its focus to the US and is likely to build a property portfolio to rival its $11.5bn Australian holdings. "The US portfolio clearly has the scope to be a very large presence," QIC Global Real Estate managing director Steve Leigh told The Australian last month. QIC made its first US foray in June, purchasing a 49 per cent stake in New York-listed Forest City Enterprises' $2.05bn regional mall portfolio. However, Frontier Advisors consultant Tom Frederick said Australian super funds were yet to move offshore in any material way. Better investments were available in Australia, Mr Frederick said. "We would never advocate investing offshore purely for the purposes of maintaining an allocation - the risk-adjusted net returns have to justify the move offshore," he said. Jones Lang LaSalle's head of international capital group, Alistair Meadows, said super funds had been nervous of investing overseas since the global financial crisis. However, he noted Australia had a comparatively small pool of prime commercial real estate worth $355bn. The Jones Lang LaSalle report did not provide figures on Australian super funds' current offshore holdings. Jones Lang LaSalle head of capital markets Australia John Talbot said the demand from cashed-up super funds - of which there are 500 in Australia - would exceed supply, causing funds to look offshore. "With the domestic market unable to offer sufficient opportunities to provide the real estate exposure sought by the funds, international real estate markets are set to benefit," he said. Atchison Consultants managing director Ken Atchison said that nearly all major funds were looking at direct holdings in offshore property. "Most exposure in the past has been through the listed companies, but now funds are looking at buying directly," Mr Atchison said. Mr Meadows expects European and American assets would be the most sought after. This would be similar to the last cycle of investment, from 1998 to 2006, when Australian listed property trusts acquired large overseas portfolios. The Jones Lang LaSalle report said the Australian Government Employees Super Trust and Q Super had provided capital to fund manager AEW for overseas opportunities, while the Future Fund was looking for direct assets, through agreements with groups such as Brookfield, and was also investing in offshore instruments.