Banks and alternative lenders are keen to grow their exposure to industrial and residential assets, according to a new lender sentiment survey.
CBRE surveyed 33 local and international banks and non-bank lenders and found nearly two-thirds of those surveyed wanted to grow their industrial exposure.
Lenders also viewed their portfolios as being underweight on the build-to-rent (BTR) sector, with almost a quarter preferring the emerging residential asset class.
Will Edwards, CBRE Associate Director, Debt & Structured Finance, said there was scope for greater bank lender involvement in both industrial and BTR amid market confidence in these sectors and their future resilience.
However, the survey found most international banks surveyed considered their portfolios overweight in office and were adopting a more selective approach to the sector.
“Non-bank lenders are helping to plug the gap, with nearly half of the non-bank lenders surveyed indicating a desire to grow their exposure to repositioning opportunities in the office sector,” Edwards said.
“This is potentially due to the opportunities to generate a higher return on investment, particularly in city fringe locations.”
That said, some lenders were exercising further caution when it came to certain growth sectors and borrowers.
Looking ahead, nearly half of the lenders surveyed expected debt margins to increase by over 20bps in the next three months, which would contribute to increased pressure on loan serviceability.
“Despite headwinds, lenders have a continued appetite to support investors with a track record, sound assets and a clear asset strategy,” CBRE Managing Director of Debt & Structured Finance Andrew McCasker said.
“However, the survey has confirmed that banks are taking the opportunity to reset pricing in line with broader economic conditions, passing on rising fund costs through increases to margins.”
Commercial real estate lending in Australia is a $330 billion market, which has grown by 65% over the past decade.