• As banks retreat, private credit fills the gap
• Zagga scales without losing discipline
• Investor demand remains strong
If 2025 was the year real estate private credit stepped into the mainstream, 2026 could be shaping up as the year it becomes a permanent pillar of the financial system.
Australia’s private credit market now exceeds $220 billion and continues to enjoy close to double digit growth. Real estate private credit alone is forecast to approach $90 billion by the end of the decade.
What’s driving that momentum is not just investor appetite, but a structural reshaping of how property is funded.
Banks, constrained by capital rules and tightening credit frameworks, are stepping back just as housing shortages deepen and project pipelines become more complex.
The traditional balance sheet is no longer expanding at the pace the development pipeline demands.
That funding gap is being filled elsewhere. Capital is shifting – not opportunistically, but structurally. At the same time, both sides of the market are reinforcing the shift.
Investors are chasing predictable income in a volatile macro environment. Developers want certainty of execution when traditional funding slows.
Global capital is also increasingly viewing Australia as a stable, under-penetrated market with real yield and legal certainty. The asset class is no longer niche. It has firmly hit its stride.
This transition is especially apparent in the mid-market – loans ranging from $10m to $100m – where deals often fall outside of the banks’ strict, black-and-white criteria yet are too niche for institutional capital.
For Zagga, this is their sweet spot and the market is primed for specialist growth.
Founded as a specialist real estate private credit manager, the firm provides construction and development funding to residential and mixed-use developers while delivering reliable, risk-adjusted income to sophisticated investors.
For almost a decade, Zagga has steadily scaled its platform, building deep borrower relationships, institutional-grade governance, and a growing market footprint.
Much of that evolution has been overseen by Tom Cranfield, Zagga’s executive director, risk and execution, whose focus has been ensuring the platform scales without compromising discipline as capital accelerates into the sector.
Scaling without dilution
Zagga delivered more than 50% year-on-year growth in FY25, lifted loan originations by 55%, and pushed active assets under management beyond $1.5 billion.
In any credit business, rapid growth naturally raises questions about whether discipline weakens as momentum accelerates.
Cranfield is clear that Zagga deliberately invested in its fundamentals ahead of the growth curve – embedding governance layers, automated loan systems, and experienced operational capability well before scale arrived.
“The business has been designed for growth and is well set-up to seize this uptick in opportunities,” he told Stockhead.
“The levels of compliance, the infrastructure that’s been built, and the methodology to run the business allow for far more significant growth without compromising on our commitment to being an investor-first business.”
Behind the scenes, multiple investment, credit, ESG, and compliance committees govern risk. Systems and reporting are automated. Institutional talent has been brought in deliberately rather than reactively.
Growth, in Cranfield’s view, only works if operational credibility keeps pace with capital inflows.
“We want to ensure that we instil the greatest level of confidence in our investors, and they can see that we are set up for the funds under management and asset growth that the team is now delivering.”
That framework also underpins Zagga’s longer-term ambition to reach $5 billion in funds under management by 2030 – not through aggressive expansion into unfamiliar products, but through controlled scaling of its existing strategy.
Bigger deals, same risk DNA
Rather than stretching into new risk profiles, Zagga expects much of its future growth to come from writing larger versions of the same transactions it already understands deeply.
As funds grow, internal concentration limits expand, allowing the business to support bigger loans within the same middle-market borrower segment.
Cranfield explained that this expansion is driven by scale rather than any change in strategy.
“So today, in the 2026 financial year, the size of the average loan might be around $25 million. In the 2028 financial year, the average loan could be at $40 million, and in 2030 the average loan might be at $60 million.”
That progression allows Zagga to support larger developments without changing underwriting discipline or asset focus.
In tightly supplied inner-city markets, increasing unit count does not materially alter demand dynamics when sponsor quality and execution capability remain consistent.
“If we’re just writing slightly larger loans for the same type of project with the same type of sponsor,” he said, “then maybe they’re delivering 60 units instead of 20 units in Lane Cove or Annandale.”
Investor confidence speaks quietly
Zagga’s roughly 80% reinvestment rate offers one of the clearest signals of investor confidence. Investors are not only rolling capital, they are increasing wallet share.
That behaviour shows up in performance too. The company’s feeder fund has never recorded a negative month since launching in 2018.
Cranfield notes that investor satisfaction in private credit is rarely loud.
“Their money speaks greater than their words,” he says. “If they’re giving it back to you at an 80% rate, and they’re increasing the average amount of capital that they have with you, that speaks louder than the words.”
December marked the strongest quarter in the firm’s history. While seasonality naturally accelerates settlements toward year-end, Cranfield believes the underlying driver is structural.
“We do believe there is greater demand,” he said. “The market’s growing at roughly 10%, and we are confident we can outgrow the marketplace.”
Culture, governance and institutional capital
Headcount expanded by 57% during the year – growth that can grab investor attention in credit businesses.
At Zagga, decision authority and governance have remained stable, with expansion concentrated in operational capacity rather than leadership turnover.
“The decision-making process is retained,” Cranfield said. “The core leadership of the business is extremely stable.”
Institutional capital is also increasingly entering the Australian private credit market, validating the sector’s maturity.
“I see that as a stamp of approval for the structural demand that we spoke about,” he said, noting that higher reporting expectations strengthen transparency rather than disrupt operations.
Regulatory scrutiny is intensifying as the sector grows.
Cranfield said Zagga broadly welcomes stronger governance frameworks that lift confidence and consistency – provided regulation avoids blunt, one-size-fits-all approaches.
Continuity, not hype
Looking ahead, Cranfield does not view 2026 as a dramatic turning point.
“I don’t know that I see it as a breakthrough,” he said. “I see it as a continuation and expansion of what we’re already doing well in the marketplace.”
Rate cycles, in his view, are unlikely to materially alter the investment narrative.
When asked what will differentiate winning private credit platforms by 2030, Cranfield remains grounded.
“We’re going to worry about what we’re doing.
“Delivering the best performance and the best outcomes for our investors and borrowers, while maintaining a great internal culture.”
In a market transitioning from novelty to necessity, private credit’s real strength lies in repetition: funding real housing supply, delivering dependable income, and quietly compounding institutional trust.
And the strongest growth stories don’t announce themselves loudly. They build patiently, transaction by transaction.
This article was developed in collaboration with Zagga, a Stockhead advertiser at the time of publishing and additionally published in The Daily Telegraph, NT News, The Cairns Post, Geelong Advertiser, Gold Coast Bulletin, Herald Sun, The Mercury, Adelaide Advertiser, Toowoomba Chronicle, The Courier Mail and the Townsville Bulletin.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
