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As reported in CBRE’s Private Credit in Australian Real Estate report for June 2025, the private credit market currently funds an estimated $50 billion of Australian real estate. Predictions are placing this figure to reach $90 billion by 2029.
“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,” said CBRE’s Pacific head of research Sameer Chopra.
Australia’s real estate sector is worth a total of $12.35 billion and is currently financed by $2.74 billion of bank/ADI lending.
Making up the vast majority of private lender loans is the residential development sector.
Of the total real estate debt in Australia, residential development loans with private lenders make up 26 per cent of the total.
This figure stood at 14.7 per cent in 2019 and is expected to grow to 35 per cent by 2030.
For comparison, residential mortgages with private lenders make up just 0.3 per cent of the total and commercial, 4.2 per cent.
Private credit’s share of commercial lending has risen from 4 per cent in 2016 to 16 per cent today.
The top 10 largest private credit lenders account for 85 per cent of the real estate loan market and, according to CBRE, the industry is primed for consolidation.
The reasoning behind the increased momentum is changes to regulatory capital requirements and increased borrower requirements for flexibility on terms, said CBRE.
“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,” Chopra said.
The latest growth trends mirror data from April that revealed the Australian private credit market was valued at $33 billion in 2016. This grew to $205 billion in 2024, representing growth of around 15 per cent each year.
Frances MacDonald, co-founder and director of Capstone Funds, said the increasing popularity is due to private credit addressing the needs of the modern investor.
“The environment of high inflation and high interests has made traditional fixed income products a less reliable diversifier to equities than in the past. This instability is prompting investors to rethink where they’re placing their capital,” said MacDonald.
“Private credit, particularly when it’s backed by real property assets and structured conservatively, has emerged as very popular in providing predictable regular income for investors that can be in the double digits without the volatility of the equities market.”
[Related: Private credit continuing to gain popularity]
