Growing evidence of a recovery in GDP growth, including household spending, has seen the futures market pare back pricing for future interest rate cuts. In effect, one 25 basis point interest rate cut has been ‘taken out’ of market pricing in the past month to the point where just two further cuts are priced between now and the middle of 2026.
STOCKHEAD & THE AUSTRALIAN
The term ‘commercial’ has been synonymous with property for decades. It conjures images of office towers, industrial blocks, and retail precincts. However, in the context of commercial real estate debt (CRED) – part of the broader real estate private credit market – commercial doesn’t describe the building, but rather, the underlying loan transaction. It’s about lending to a commercial borrower, typically a developer, and assessing the quality of the sponsor, the project, risk exposure, and execution. Tom Cranfield, Executive Director of Risk & Execution at Zagga, explains why this distinction matters for investors.
At the recent Commercial Property & Development Finance Summit, industry leaders came together to discuss one of the most significant shifts in Australia’s commercial real estate finance — the rapid rise of private credit.
Persistent volatility and increased correlation across asset classes have led investors to look beyond conventional tools in search of better defensive strategies to protect income and build long-term resilience. This has accelerated interest in alternative asset classes—particularly real estate private credit.
Unlike traditional bonds, which tend to lose value when rates rise, floating-rate real estate credit adapts with the market, making it a powerful tool in modern defensive strategies to protect income.
STOCKHEAD & THE AUSTRALIAN
Not all credit is created equal and thorough due diligence is essential. But, while prudent risk assessment is essential, investors must also separate fact from fiction. In private credit, persistent myths often cloud judgement and hold investors back from otherwise sound opportunities.
THE AUSTRALIAN
Just as corporate bonds provide an alternative to buying shares in companies, CRED provides exposure to the property market without needing to own the assets. However, unlike bonds, which depend on the yield curve, CRED offers a contracted return from day one.
The important news in the first month of 2025 centred on a further sharp deceleration in inflation, the full pricing in of a series of interest rates cuts from the RBA and the start of the Trump Presidency in the US.
The other major issue to unfold in Australia is falling house prices at a national level, but it remains the case that market conditions are uneven from city-to-city…
We are very pleased to report that all Funds across the Zagga portfolio have performed very well for the period ended 31 December 2024.
YOUR INVESTMENT PROPERTY
With the commercial property market facing challenges, private credit is becoming a smart way for investors to still get good returns while avoiding too much risk.
Despite playing an important role in the property ecosystem, CRED is often shrouded in myths and misinformation. Here, we help you master the CRED market, busting myths, understanding the role of alternative lenders, and providing tips and tricks on navigating this growing asset class.
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 1 July 2025.
*Average investor return across the active portfolio as at 1 July 2025.
**Target return is after expenses and any applicable management fees for the year ended 30 June 2025. 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.
