Why private-credit has shot up the agenda
Recent borrower stress and redemption restrictions at some exposed funds have intensified scrutiny of underwriting standards, asset valuations and liquidity management. The Australian Securities and Investments Commission (ASIC) has described the private credit sector more broadly as facing its 'first real test'.
Clients are asking what this means for Australian BTR: whether private-credit stress could tighten development debt, reprice risk or compound contractor pressure. Indeed, feasibility was identified as the biggest barrier for investors to increasing the exposure to Australian Living, in our recent Cushman & Wakefield's 2026 APAC Living Investor Survey External Link.
The short answer is that private credit accounts for a smaller share of development finance in institutional BTR than in conventional build-to-sell (BTS), although it remains a direct funding source for some BTR schemes. While, BTR's direct exposure appears comparatively limited, it is not isolated from changes in a broader debt pricing or from stress elsewhere in the apartment-development supply chain.
Private credit has reshaped development finance
Non-bank lending is broader than private credit, but the RBA identifies private credit as an important contributor to this shift, particularly in residential construction since 2019. It has widened the pool of capital available to residential development, including for schemes that may have struggled to fit conventional bank lending parameters, albeit, at a higher cost of debt.
The question for the BTR sector is whether recent stress changes the availability, cost or terms of development capital.
Chart 1: Non-bank share of selected lending categories, December 2025 (%)
Source: RBA, Cushman & Wakefield Research
BTR is relatively insulated - but sensitive to feasibility pressures
That relative
insulation does not leave BTR immune. Projects reliant on private credit could
face greater lender selectivity or changes in the availability, cost and terms
of debt.
The greater risk is that more persistent stress spills over into broader debt pricing and underwriting. Higher margins, lower leverage or more conservative covenants would increase equity requirements and raise the hurdle for new schemes. So far, however, there is little tangible evidence of this feeding through to the wider BTR funding market. Competition among banks remains healthy, and well-capitalised groups continue to secure competitive terms. If broader funding conditions tightened, it would matter for BTR: feasibility is already finely balanced, leaving schemes sensitive to small changes in financing costs or other development assumptions.
