Private credit tipped to play $90bn role in Australian real estate funding by 2029
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Private credit funding for Australian real estate could grow by 80 per cent over the next five years, largely driven by increased residential development lending.
CBRE’s newly issued Private Credit in Australian Real Estate report forecasts the sector could reach approximately $90 billion by 2029, up from the current $50 billion.
The growth is expected to be fuelled by residential development projects, with certain commercial property sub-segments also attracting interest following changes to regulatory capital requirements and increased borrower demand for flexible terms.
CBRE’s Pacific Head of Research Sameer Chopra said private credit already provides significant funding across Australia’s property sector.
“CBRE estimate that Australian real estate is funded by circa $50 billion of private credit and that this could grow to approximately $90 billion by 2029,” Mr Chopra said.
“Private credit already provides funding for over a quarter of all residential construction in Australia, including land subdivisions, and some funds also have exposure to recent office and industrial acquisitions.”
The report highlights that Australia’s real estate sector is worth $12,350 billion and is currently financed by $2,740 billion of bank and authorised deposit-taking institution lending, alongside the current $50 billion pool of private credit.
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Current private credit penetration stands at 0.3 per cent for residential mortgages, 26 per cent for residential development, and 4.2 per cent for commercial properties.
Mr Chopra noted institutional capital was playing an increasingly active role in providing finance for credit funds, helping to fuel the sector’s growth.
“Circa $8 billion to $10 billion of additional capital could be raised each year to 2029, with lower RBA cash rates expected to increase the relative attraction of private credit returns,” he said.
The report also highlights scope for consolidation in the private credit sector, where the top 10 providers currently hold an 85 per cent market share.
The forecast growth reflects the evolving financing landscape in Australian real estate, with private credit emerging as an increasingly important funding source beyond traditional bank lending.