The Centuria Bass Australian Property Development and Finance Index 2024 revealed that private credit is rapidly increasing its foothold in the property development sector, as banks grow cautious about mid-market projects.
Research from Centuria Bass Credit (CBC) shows that 70% of industry respondents have significantly increased their use of private credit over the past five years, with 72% now sourcing loans from non-bank lenders.
While private lending may come with higher costs, 95% of respondents believe the benefits – such as quicker decision-making, higher loan-to-value ratios, and more flexible terms – make it worthwhile.
Nick Goh (pictured above), joint-CEO of Centuria Bass, highlighted a shift over the past decade.
“There'll always be a place for banks at the lower risk end of the market ... but that sector represents only a component of the industry, which is presently less active,” Goh said.
David Stone, head of Capital at Bathla Group, shared how private credit aligns with his business needs.
“Our business is predicated on speed…” Stone said. “Private credit also allows you to lever a little higher. For those reasons, it makes sense.”
Stone said that lengthy bank loan processes can hinder project timelines.
“The very long gestation period for an application means ... you might find out that you’ve got to provide additional equity ... whereas with private credit, you’re generally getting approvals in a pretty condensed time frame,” he said.
Founded in 2016, Centuria Bass has expanded to manage approximately $2 billion in assets, consistently delivering returns for investors on secured private credit loans. It recently added two industry experts to its team, further strengthening its operational and distribution capabilities.
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