6% spike in commercial real estate debt

The last twelve months have seen total real estate bank debt in Australia grow 6% to reach an all-time high of $277.6 billion.

Plan1 Project Management and Consultancy is an independent Australian property and construction consultancy firm. The director, Richard Jenkins believes industrial and office sectors of the property market have led the $15.6 billion growth in commercial real estate (CRE) debt.

“Overall, CRE debt in the office, industrial, retail and tourism sectors have reached all-time highs,” Mr Jenkins said.

Yarraport Managing Director, Kathy Johnson, noted that the proportion of Australian CRE debt held by the major banks ( ANZ, NAB, CAB and Westpac) has declined to 70.5% in the September quarter.

This means the big four banks account for the lowest level of CRE debt since 2008.

The current figure is down from the 2013 peak at 84.7%.

Foreign banks

Foreign banks and increasing their presence in CRE loans.

Ms Johnson pointed out that foreign banks accounted for $3.5 billion more CRE debt after the September quarter than the same time a year ago, this is a record high.

“Foreign banks accounted for 23.8% of total CRE debt, up from 20% three years ago while over the past year, Australian CRE debt held by foreign banks has increased by 5.7%,” Ms Johnson explained.

“CRE debt exposure held by the foreign banks in the office, industrial and also tourism sectors are at all-time highs,”

Kathy Johnson, Yarraport Managing Director

Residential Real Estate Debt

Residential development debt on the other hand has increased over the year but has remained 16% below the rights of 2017.