Private Capital Drives Rise in Lending Demand

Australian lenders are pushing ahead with commercial property loans despite global market jitters, intensifying competition and favouring stable sectors like logistics and residential housing. While fears of economic slowdowns ripple worldwide, over half of surveyed lenders are expanding their exposure rather than retreating, fuelled by robust bank balance sheets and a growing wave of private credit investment.

The sentiment snapshot, compiled by a major real estate agency, drew from insights shared by 34 domestic and international financial institutions. Despite rising uncertainty elsewhere, the Australian lending landscape has stayed steady, with no respondents planning to scale back their exposure. Australia’s reputation for solid assets and resilient market fundamentals continues to attract funding in both traditional and alternative sectors.

Digging into the details, industrial and logistics remain the standout favourites, even with cracks starting to appear in their fundamentals. Residential projects, especially those built for sale, have drawn stronger interest too. Momentum is holding steady in the build-to-rent segment, though demand for high-tech assets like data centres has cooled, likely due to last year’s headline-grabbing $24 billion acquisition in that space. Office buildings, especially in secondary locations, aren’t getting the same love, but lenders targeting A-grade assets in core districts are still competitive.

The broader picture points to a complex mix of optimism and caution. Investors and lenders alike appear torn about the Reserve Bank’s future cash rate path. More than half expect at least two more rate cuts through 2025, but projections beyond that diverge sharply. With the next RBA announcement looming, the industry is poised for signals that could reset expectations and reshape debt strategies heading into 2026.

Source: The Australian, FinStreet, CBRE