Real Estate Limited Partnerships (RELPs) in Australia: 2025 Investor Guide

Australia’s property market has always been a magnet for both seasoned and first-time investors. But in 2025, as the appetite for alternative investment vehicles grows, Real Estate Limited Partnerships (RELPs) are emerging as a flexible, tax-efficient way to access property assets—without the headaches of direct ownership. If you’re curious about RELPs and how they fit into the modern Australian investment landscape, this guide is for you.

What Are Real Estate Limited Partnerships (RELPs)?

RELPs are collective investment structures that pool funds from multiple investors to acquire, manage, and sell real estate assets. In an RELP, there are two primary roles:

• General Partner (GP): Responsible for managing the partnership’s assets, making strategic decisions, and handling day-to-day operations. The GP assumes most of the risk and liability.
• Limited Partners (LPs): Provide the bulk of the capital but have limited liability. LPs are passive investors—they benefit from profits, but aren’t involved in management.

This structure allows investors to participate in large-scale property deals—think office towers, shopping centres, or build-to-rent developments—without needing millions in upfront capital or specialist property expertise.

Why Are RELPs Gaining Traction in Australia?

Several 2025 market shifts are fuelling the popularity of RELPs:

• Diversification: With the ASX showing volatility and residential property yields tightening, investors are looking for diversification. RELPs give exposure to commercial and alternative property sectors—like healthcare or logistics—that are otherwise out of reach for most individuals.
• Tax Efficiency: RELPs are flow-through vehicles, meaning income and losses pass directly to investors. Following the 2024-25 Federal Budget, RELPs can continue to access certain managed investment trust (MIT) tax concessions, provided they meet Australian Taxation Office (ATO) compliance requirements.
• Professional Management: GPs are often established property syndicators or funds management firms, bringing deep market knowledge and networks to the table.
• Lower Barriers to Entry: Minimum investments can start from as little as $10,000, making commercial property accessible to SMSFs and retail investors.

For example, in early 2025, a Sydney-based RELP raised $40 million from over 150 LPs to acquire a portfolio of medical centres—an asset class benefitting from Australia’s ageing population and resilient healthcare demand.

How RELPs Work: Structure, Returns, and Risks

RELPs typically have a fixed lifespan, often 5–10 years. Here’s how the process works:

1. Capital Raise: The GP markets the opportunity, outlining the property strategy, target assets, expected returns, and risks.
2. Acquisition & Management: Once funded, the GP acquires properties, manages tenants, oversees improvements, and collects income.
3. Distributions: Rental income (after expenses) is paid to LPs, often quarterly or semi-annually. The GP may also earn a management fee and a performance fee if returns exceed a hurdle rate.
4. Exit: At the end of the term, properties are sold. Capital gains are distributed according to each partner’s share.

Potential Returns: RELPs targeting value-add strategies (e.g., refurbishing ageing offices or converting warehouses to data centres) can offer internal rates of return (IRRs) in the 8–14% range, though this varies with market conditions.

Risks: Investors should consider:

• Illiquidity—funds are locked in until asset sales
• Market and tenant risk
• GP execution risk
• Regulatory changes—especially as the ATO and ASIC increase scrutiny of property syndicates and managed investment schemes in 2025

2025 Regulatory and Tax Updates for RELPs

The 2024-25 Federal Budget and ATO guidance have introduced several updates relevant to RELPs:

• Foreign Investment Review Board (FIRB): Stricter requirements now apply for foreign investors in property partnerships, with additional reporting and approval hurdles.
• Managed Investment Trust (MIT) Eligibility: RELPs structured to meet MIT rules can access concessional tax rates on certain property income—15% for eligible foreign investors and flow-through treatment for Australian LPs.
• Disclosure and ASIC Oversight: ASIC’s 2025 crackdown on non-compliant property syndicates means GPs must provide clearer disclosure on risks, fees, and liquidity. Investors should review Product Disclosure Statements (PDS) carefully.
• SMSF Participation: Self-managed super funds remain eligible to invest in RELPs, but trustees must ensure the underlying investments meet the sole purpose test and are adequately diversified.

Is a RELP Right for Your Portfolio?

RELPs are not one-size-fits-all. Consider a RELP if you:

• Want exposure to commercial property with professional management
• Are comfortable with medium-term illiquidity (usually 5–10 years)
• Prefer a passive investment role
• Are seeking tax advantages via flow-through income or MIT eligibility

But always review the GP’s track record, the underlying assets, and the fee structure. In 2025, with Australia’s property landscape evolving and regulators sharpening their focus, due diligence is more critical than ever.