Publications

- March 1, 2019: Vol. 11, Number 3

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Debt on display: Australian real estate debt investment is a major opportunity for investors

by Peter Mitchell

The Australian real estate debt sector is undergoing substantial systemic change and creating new opportunities for investors, both local and international, and institutional as well as noninstitutional.

Recent developments in the real estate lending market

Australia’s mortgage market is roughly US$1.3 trillion in size and is very profitable, with low delinquencies and healthy commissions. Until recently, the major Australian banks accounted for approximately 90 percent of the market, which is very high compared with most other developed economies where commercial banks tend to account for about 40 percent to 60 percent of the market.

Australian banks are going through a significant withdrawal from commercial real estate loans, however, particularly in development and construction finance. This has been happening during an unprecedented nationwide construction boom, primarily in Sydney and Melbourne, buoyed by strong population growth and reco

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