The accommodation market for the estimated 28,000 of the more than 400,000 participants in the NDIS who are likely to qualify for SDA is chronically undersupplied, with around 12,000 of those participants in most immediate need of more suitable accommodation.
This includes around 6,000 younger people with disabilities living in aged care facilities, and a further 6,000 or so living at home in unsuitable and burdensome situations (with aging parents for example, or in properties with unsafe or inappropriate design characteristics).
The SDA scheme has been designed to address this chronic undersupply. Through it the federal Government is striving to motivate private investment (such as that to be made by the Fund) of circa $5Bn in its bid to see sufficient brand-new residential properties built for inclusion in the scheme.
To achieve this, the federal Government has committed circa $700M per annum in SDA scheme funding from the overall NDIS budget of circa $20Bn per annum.
With positive ethical and social objectives at its core, investment in SDA registered properties presents the opportunity for gross yields of 16% p.a.* (or greater), while still retaining the prospect for long-range capital upside that has long been attractive to investors in Australian residential property. Details of SDA scheme pricing models, the assumptions we use to prepare the gross yields stated and some illustrative pricing examples can be found at Sections 7.13 and 7.14 of the Fund’s PDS.
The NDIS is a legislated commitment of all Australian governments requiring the agreement of all governments (federal and state) for any amendments; and the SDA commitment forms part of the legislated framework. Like other parts of the NDIS, SDA employs a market-based approach by making funding available to SDA Participants.
The intent of the SDA pricing approach is to stimulate growth in the supply of high quality and fit-for-purpose SDA. The timeframe for the pricing has also been aligned with the expected investment horizon of institutional investors like the Fund, having been set at 20 years.
The SDA Price Guide sets out the current pricing for SDA payments across different dwelling categories and types and occupant numbers. Those considering an investment in the Fund should read the SDA Price Guide in conjunction with a number of other documents, including the SDA Rules, the SDA Operational Guidelines, the SDA Guide to Suitability, and the NDIS Terms of Business for Registered Providers, which are all publicly available from the NDIS website at www.ndis.gov.au.
*based on a $640,000 house and land, designed and constructed to meet SDA criteria for “High Physical Support” needs, with overnight onsite assistance facilities (OOA), with two (2) SDA qualifying residents, and a Location Factor of 1.00 as exampled in Section 7.14 of the Fund’s PDS. Gross yields do not consider any vacancy and are before the deduction of taxes and expenses. The Fund may not be successful in achieving the gross yields stated.
“The residential property market for an estimated 28,000 NDIS participants that will likely qualify for SDA is chronically under-supplied, with around 12,000 participants in most immediate need of more suitable accommodation. This includes around 6,000 younger people with disabilities living in aged care facilities, and a further 6,000 or so living at home in unsuitable and burdensome situations”.