Not all private credit is created equal: here’s why that matters
As global volatility increases, investors are turning to private credit, but not all strategies carry the same risks. Australian real estate-backed private credit is considered a safer option compared to US corporate lending.
Global volatility is driving investors to private credit, but the asset class is not uniform. The US private credit market is heavily concentrated in corporate lending, involving leveraged borrowers and complex capital structures, raising concerns around liquidity and systemic risk. In contrast, Australia's real estate-backed private credit market is secured by physical assets in a robust property market. The Australian property market is valued at over $12 trillion, with a sustained housing undersupply and supply-demand imbalance strengthening the investment case. Australia's private credit market is valued at over $200 billion, with approximately $85 billion allocated to commercial real estate lending. The distinction between US corporate lending and Australian real estate-backed private credit matters, as they pose different risks to investors.
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