real-estate-debt
$15.6 billion increase in real estate debt recorded in the twelve months to date. Image – Canva
  • $15.6 billion growth in total commercial real estate debt seen in last 12 months
  • Industrial and office sectors said to lead the debt growth
  • Residential development debt has also increased

The last twelve months have seen total real estate bank debt in Australia grow 6% to reach an all-time high of $277.6 billion.

Plan1 Project Management and Consultancy is an independent Australian property and construction consultancy firm. The director, Richard Jenkins believes industrial and office sectors of the property market have led the $15.6 billion growth in commercial real estate (CRE) debt.

“Overall, CRE debt in the office, industrial, retail and tourism sectors have reached all-time highs,” Mr Jenkins said.

big-four-banks
Big four banks account for less CRE debt. Image – Canva

Yarraport Managing Director, Kathy Johnson, noted that the proportion of Australian CRE debt held by the major banks ( ANZ, NAB, CAB and Westpac) has declined to 70.5% in the September quarter.

This means the big four banks account for the lowest level of CRE debt since 2008.

The current figure is down from the 2013 peak at 84.7%.

Foreign banks

Foreign banks and increasing their presence in CRE loans.

Ms Johnson pointed out that foreign banks accounted for $3.5 billion more CRE debt after the September quarter than the same time a year ago, this is a record high.

“Foreign banks accounted for 23.8% of total CRE debt, up from 20% three years ago while over the past year, Australian CRE debt held by foreign banks has increased by 5.7%,” Ms Johnson explained.

“CRE debt exposure held by the foreign banks in the office, industrial and also tourism sectors are at all-time highs,”

Kathy Johnson, Yarraport Managing Director

Residential Real Estate Debt

Residential development debt on the other hand has increased over the year but has remained 16% below the rights of 2017.



You May Also Like

Australian building costs have continued to soar, but has your insurance cover kept pace?

MCG Quantity Surveyors analysis found underinsurance could cost homeowners over $100K to replace a property, with the issue even more profound in the commercial property sector.

Thinking of borrowing for a new home? We decode the home loan lingo and explore a common mistake

We take a look at everything from principal and interest to rates and more.

When will Australian property prices fall? One major challenge continues to prop prices up

Property prices are up by over 35% across the country since Covid, and while not the same story in each city, that’s little solace to prospective buyers pulling their hair out.

A window of opportunity could be open for savvy Australian property investors, but time is ticking

One expert has noticed investors are on the move while there’s less competition and fewer buyers in the marketplace.