Aussie Non-Bank Lenders Eye Doubling $74bn Market

The burgeoning non-bank lending industry is growing apace, accruing about 6 per cent of the Australian Commercial Real Estate Debt (ACRED) market share in the past four years, while major banks have given ground. 

The major bank lenders have dropped from 86 per cent of the market share to about 73 per cent over the past decade. 

But there is still a way to go on the growth of non-bank lending in Australia, compared with the juggernaut that it is in the US. 

Recently commissioned research by non-bank lender Payton Capital showed that the value of non-bank lending in the market was about $74 billion, with an opportunity to double in the next five years. 

Payton Capital chief executive David Payton said the growth opportunity in the market was indisputable.

“Our business growth in recent years clearly shows we have experienced this shift towards non-bank lending,” Payton said.

“To see it outlined in the data we’ve compiled is really exciting for the whole non-bank ACRED industry.”

Non-bank lenders have chalked up a 35 per cent compound annual growth rate since 2020, according to the research by Foresight Analytics. 

The research also revealed the biggest opportunity for non-bank lenders was in the mid-market space, for deals from $5 million to $50 million.

Strong population growth and continued undersupply of residential property was scaffolding the investment thesis for high-net-worth individuals and family offices backing non-bank lending funds. 

“Non-bank lenders, particularly those in the mid-market space, have proven that they are able to mobilise and activate property projects faster, with more flexibility, increasing certainty for property developers,” Payton said. 

But Payton said it was still a “shifting landscape”. 

Non-bank lender Qualitas this month told The Urban Developer Australia needed $115 billion in capital to build enough new homes in the next four years, let alone any other real estate.

The global commercial real estate debt market is estimated to be worth $450 billion and growing at about 2 to 5 per cent annually.