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W Sydney Hotel – Image Credit Marriott International
Despite rising global uncertainty, lenders’ appetite for Australian investment opportunities remains strong, according to a recent survey by CBRE.
Survey Findings: Continued Interest in Australian Real Estate
A recent CBRE H1 2025 Lender Sentiment Survey, conducted among 34 local and international banks and non-bank lenders, revealed that interest in new loans has remained relatively steady since the previous H2 2024 survey. Despite global upheavals, 56% of lenders aim to increase their commercial real estate exposures, and none of the surveyed lenders plan to decrease their portfolios.
According to Andrew McCasker, CBRE’s Managing Director of Debt & Structured Finance, strong balance sheets of domestic banks and significant capital raised in the private credit sector underpin the sustained appetite for lending to quality assets and sponsors.
Lenders’ Preferred Sectors
Drilling down to specific sectors, the survey indicates that lenders continue to favor Australia’s industrial and logistics sector despite weakening fundamentals in recent years.
The residential sector is also gaining traction. Interest in build-to-sell properties has grown for the fourth consecutive period, ranking second on the list of preferred asset classes. Build-to-rent properties rank third, experiencing a mild increase in interest from H2 2024 levels.
However, interest in data centres has waned from the highs seen in H2 2024, following Blackstone’s $24 billion AirTrunk acquisition, with the asset class slipping from third to fifth in the rankings.
Cautious Approach to Office Sector
Local lenders are cautious about the office sector, favoring office repositioning opportunities over stabilized office assets. The survey points out asset type and location are among the top three factors affecting lender appetite for refinance, as commercial real estate bifurcation rises across the country for all sectors.
Divided Views on Future Cash Rate
As Australia’s cash rate-cutting cycle is in progress, the survey reveals a division among local pundits and lenders about the terminal rate for this cycle. Over half of the surveyed lenders anticipate two additional rate cuts over the remainder of 2025, yet there is no consensus on the cash rate as of June 2026.
Additional Survey Findings
Other insights from the survey include rising credit margins from a cyclically low base, with 32% of bank and non-bank lenders expecting margins to increase by at least 10 basis points over the next three months. Additionally, hedging requirements continue to decline, with over two-thirds of surveyed lenders having an interest rate hedging requirement between 0% and 25%.
Read the H1 2025 Lender Sentiment Survey.
