Long-term studies have shown that over 10 years or more, the broad returns from the two major classes of equities – shares and property – have been fairly similar. But they often have different levels of liquidity and dividend paying shares offer the tax benefits of imputation credits.
Unless they have a multi-million dollar fund, it’s unlikely that direct property is automatically suitable for most SMSFs. An investment of $350,000 to $600,000 in a single residential property will, for many funds, lead to both an over allocation of assets to property, and also material single asset exposure.
In many cases, the more manageable property investments for SMSFs are units in a property trust or syndicate. Investments need to offer reasonable income and liquidity; luckily, there is a range of listed property investments that also give diversification as well as liquidity.