Banks’ Pullback from Offices and Hotels Creates Opportunities for Renown Private Lending
Over the past 12 months, Australian banks have expanded their commercial real estate loan books at the slowest rate in four years, as they adopt a more cautious approach to assets such as office towers, hotels, and residential land projects. This trend, identified by consultancy Plan1, highlights a shift that opens significant opportunities for non-bank lenders, including Renown Private Lending.
According to Plan1's analysis, Australian banks' total commercial real estate (CRE) debt reached a record $374.1 billion over the year to March. However, this represented a growth of just 5.1%, the slowest pace since 2020 and notably below the 10-year annual growth rate of 7.9%. Richard Jenkins, co-founder of Plan1, attributes this slower growth to traditional lenders becoming more selective in response to evolving market risks.
Jenkins noted that banks have particularly reduced their exposure to the office sector, residential land subdivisions, and tourism sectors. This strategic re-weighting of their portfolios provides a lucrative opportunity for non-bank lenders to increase their market share in these asset classes.
For instance, the combined market share of the big four banks (ANZ, NAB, Commonwealth Bank, and Westpac) in the CRE debt market has declined from 84.7% in 2013 to 70.9% as of March this year. Westpac’s recent financial update revealed a reduction in its lending for office properties, from 2.1% of its total committed exposure in September 2020 to 1.4% in May. Similarly, the Commonwealth Bank has implemented tighter loan-to-value ratios for office properties in high-vacancy areas.
As banks retreat, Renown Private Lending steps forward. Our expertise in navigating the complexities of the commercial real estate market allows us to offer flexible and tailored financing solutions that banks may no longer provide. We understand the unique needs of our clients, especially in sectors currently underserved by traditional banks.
For example, non-bank lender Zagga has successfully filled the gap left by banks, providing significant loans for projects like the refurbishment of Invicta House in Melbourne and a luxury development in Sydney’s Rose Bay. This demonstrates the viability and attractiveness of non-bank lending options.
Renown Private Lending is uniquely positioned to capitalise on these opportunities. Our approach to private lending focuses on providing clients with the financial solutions they need, whether it's refinancing existing debt or securing new financing for development projects. With our deep understanding of the market and commitment to personalized service, we are poised to support our clients through the complexities of the commercial real estate landscape.
Looking ahead, the expected increase in demand for all property asset classes, driven by population growth, will push the level of Australian debt for commercial construction to $300 billion by 2026. This growth, coupled with increased regulatory capital requirements for the major banks, will further enhance the role of non-bank lenders.
At Renown Private Lending, we are ready to meet this demand, offering flexible, responsive, and competitive financing solutions. Our goal is to support the growth and success of our clients in the evolving commercial real estate market.
Explore how Renown Private Lending can help you navigate these changes and secure the financing you need for your next project. Contact us today to learn more about our services and how we can assist you in achieving your financial goals.
