Australia’s commercial real estate (CRE) market is entering a period of significant refinancing pressure, with a large volume of loans maturing over the next two years. Higher borrowing costs and softer asset valuations are creating a widening gap between the capital required by property owners and the funding available from traditional lenders. Estimates of this shortfall vary, with some analysts pointing to a potential gap of around $39 billion, while others suggest it could exceed $100 billion as banks continue to retreat from portions of the CRE market.
This environment is prompting borrowers to seek more flexible forms of capital, including equity, preferred and convertible structures, bond issuance and secured lending. The shift is also accelerating interest in private CRE credit, particularly among investors who see credit as a way to maintain exposure to real estate through a capital‑focused, income‑oriented strategy. Non‑bank lenders report growing inquiry levels from superannuation funds, although allocations are still developing as institutions work through portfolio fit and asset allocation frameworks.
Industry leaders note that CRE credit offers shorter duration, natural liquidity and structural protections through mortgage security. These characteristics, combined with the broader pull‑back from major banks, have supported the growth of the non‑bank lending sector. Managers such as MaxCap and Madigan continue to scale, and offshore capital from institutions including GIC, ADIA, APG and others now plays a significant role in funding local CRE credit.
Regulatory changes are also influencing the market, with bank balance‑sheet constraints reducing their competitiveness in parts of the sector. As banks’ market share declines from historical highs, non‑bank lenders are increasingly stepping in to finance residential, industrial and mixed‑use projects, as well as to support refinancing needs. For investors, participation typically occurs through mandates or pooled funds, which provide diversified exposure to CRE loan portfolios. Pooled vehicles can deploy capital more quickly, while separate mandates often require longer lead times before capital is fully drawn.
Overall, the combination of refinancing demand, constrained bank lending and increased institutional interest is creating a sustained opportunity for non‑bank lenders and investors seeking income‑oriented real estate exposure through credit rather than equity.