Renovation showcases ability and agility of private credit to support commercial development as the historic Invicta House in Melbourne’s Flinders Lane officially opens this month after a comprehensive renovation and expansion breathing new life into the 100-year-old building.
INVESTOR DAILY
In buoyant times, it’s easy to overlook the role of the steady and stable parts of a portfolio – the conservative income-generators that don’t make headlines. But these are exactly the assets that provide stability when everything else is in flux. Yet the traditional 60/40 portfolio is no longer proving a robust stronghold among record volatility. Traditionally, multi-asset portfolios have relied on the negative correlation between bonds and equities for diversification. However, increasingly, we are seeing a positive correlation in public markets. The year 2022 was an extreme example, where we saw significant correlated dips in both bonds and equities, and it is what we have again seen repeated in the most recent bout of market volatility.
Given current economic conditions, there is near unanimity that the RBA will resume its interest rate cutting cycle on 20 May with further interest rate cuts expected over the following 12 months. Low inflation, a soft economy and signs of a weakening in the labour market are all factors that has markets pricing in a cash rate below 3 per cent in the first half of 2026, down from the current 4.10 per cent.
FEAR AND GREED
Sean Aylmer speaks with Tom Cranfield, Executive Director at Zagga, about the rise of real estate private credit as a defensive asset. Tom explains how tighter bank lending has opened opportunities for alternative lenders, offering stable returns and low correlation to public markets. They also look at the growing role of private credit in portfolio diversification, particularly in the face of volatility on equity markets.
As public markets fluctuate, the need for portfolio resilience and alternative income sources has never been greater. This has driven institutional and high-net-worth investors to seek diversification in uncorrelated asset classes, such as real estate private credit.
INVESTOR DAILY
Despite global uncertainty, Australia’s private credit market is predicted to see strong growth in 2025, fuelled by business lending and attractive returns, as the Reserve Bank’s cautious rate cuts support continued demand.
SELFMANAGEDSUPER
Zagga has achieved an increased global presence with the registration of its CRED fund as a foreign investment trust in Japan. The development means the Fund will now be available for Japanese investors seeking exposure to the Australian real estate private credit sector and the benefit of its characteristics, such as providing increased diversification, delivering a strong source of income and enhancing the defensive component of a portfolio.
Real estate private debt can offer unique benefits, for both investors and borrowers. For income-seeking investors, the offer of attractive, reliable and risk-mitigated returns backed by a tangible, real property asset can be a compelling investment case.
The broad economic themes that kicked off 2024 remain in place, with economic weakness, unemployment moving higher and inflation set to fall to the RBA’s 2 to 3 per cent target.
Recently returned from a trip to a number of SE Asian countries, Zagga CEO & Co-Founder, Alan Greenstein, shares his thoughts on the increasing appeal of Australian real estate private credit among family offices in the Asia-Pacific region amidst global economic shifts and how this alternative asset class can be an attractive option for both foreign and local investors.
We would like to acknowledge the Traditional Custodians of the lands, seas, and communities in which we provide our services. We would also like to pay our respects to the Elders past, present and emerging, and the continuing cultural influence they have on Australia.
Zagga Market Pty Limited (Australian Credit Licence 490904) ACN 611 662 401 acts as the Servicer of loans acting on behalf of the credit provider, Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786, trustee of the Zagga Investments Lending Trust
All portfolio numbers quoted correct as at 31 January 2025.
*Average investor return across the active portfolio as at 31 January 2025.
**Target return is after expenses and any applicable management fees for the year ending 30 June 2024. OCR = Australian Reserve Bank Official Cash Rate.
Past performance is not a reliable indicator of future performance and investments are subject to investment risk, fees and costs. Returns are not guaranteed.
Prospective investors wishing to invest in a Zagga direct investment or a Zagga Fund should fully consider the Information Memorandum, ZFF Fact Sheet and/or ZWF Brochure, available from Zagga, before applying to invest. Investments are subject to risks.
Articles on this website have been prepared by Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786 (Zagga) for information purposes only. It doesn’t take into account your objectives, financial situation or needs, nor is it intended as a substitute for any accounting, tax or other professional advice, consultation or service. Nothing in this article shall be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction.
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Economic conditions may change.
Any analysis provided in this article is based on information obtained from sources believed to be reliable but Zagga does not make any representation or warranty that it is accurate, complete or up to date. Zagga accepts no obligation to correct or update the information or opinions in it. Any opinions expressed in this article are of the author and is subject to change without notice. Readers are reminded to exercise caution and use their own judgment when interpreting and applying the information contained in this article No member of Zagga accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of such information.
