DESPITE the pandemic, total Australian bank real estate debt reached an all-time high of $262.7 billion in 2020, with the 5.6% growth underpinned by a $13.8 billion increase in commercial property debt.
Analysis of APRA figures shows growth of Australian commercial real estate (CRE) debt was led by office property, which has also hit an all-time high, according to Richard Jenkins of Plan1.
“Unsurprisingly, CRE debt in the industrial sector is nearing all-time highs at $41.1 billion, spurred by the growth of e-commerce,” he said.
This year has already seen some record deals amid intensifying demand for industrial assets. This includes ESR and GIC’s $3.8 billion acquisition of Blackstone’s Australian logistics portfolio, which is being backed by four major lenders and should result in the industrial sector also hitting a new record.
Elsewhere, Qualitas has partnered with Tim Gurner on a $1 billion build-to-rent development fund, and Suleman Group will start on a build-to-rent project in western Melbourne’s Spotswood.
Yarraport co-founder, Kathy Johnson said convenience shopping is also sought-after with Yarraport advising on Sandhurst Retail & Logistics’ development of a neighbourhood shopping centre in Botanic Ridge.
Johnson said residential development debt, including high-density development and land subdivision, decreased over the year and is now down to its lowest level since June 2015.
The share of Australian CRE debt held by the major lenders ANZ, NAB, CBA and Westpac increased slightly over the quarter to 71.4%, but was below the 72.7% a year earlier.
Jenkins said that in response to APRA’s revisions to ADI capital requirements, banks have been forced to reweight their portfolios to loans backed by income-producing real estate assets.
“CRE debt exposure held by the major banks in the office sector has reached all-time highs, whereas their exposure to residential development has fallen to five-year low.”
Centuria has just moved into the real estate debt markets space, securing a 50% investment in Bass Capital that presents a pipeline of opportunities worth more than $300 million, and global investment manager Schroders has bought a majority stake in Multiplex scion Andrew Roberts’ non-bank commercial real estate lending business RF Eclipse.
For the first time since 2018, CRE debt held by foreign banks fell over the quarter, but remains between $5 billion and $6 billion higher than their levels a year ago.
Foreign banks accounted for 23% of total CRE debt, up from 20% two years ago, and Australian CRE debt held by foreign banks has increased by 10% over the past 12 months.
CRE debt exposure held by the foreign banks in the office sector has reached all-time highs, Johnson said.
