The Property Council of Australia has cautioned that reforms aimed at enhancing the public investment market must not harm the country’s growing private market.
The warning comes as the Australian Securities & Investments Commission (ASIC) considers regulatory changes governing private lending and unlisted investments as part of a broader review into Australia’s public and private capital markets.
In its formal submission, the Property Council stressed the interdependence between the real estate industry and private credit funds, which have increasingly filled a financing gap left by more traditional lenders.
“Increasingly we have seen private credit funds act as alternative lenders to the major banks, providing access to capital that is vital for the delivery of real estate projects, and providing for recapitalisation or transitional finance,” the Property Council said.
The council acknowledged the importance of institutional banks, describing them as foundational to Australia’s lending framework.
“This is not to say the institutional banking sector is not also a critical partner for Australia’s property industry,” it said. “As the cornerstone of the lending system, they provide a safe and stable partner in delivering many real estate projects across the country, as well as underpinning over $2 trillion in mortgages.”
The submission emphasised that both the non-bank and banking sectors have “essential and complementary roles” in the ecosystem of real estate funding.
“The strength in Australia’s property sector lies not in the dominance of either the non-bank or institutional banking sectors, but rather their essential and complementary roles as part of a competitive lending market,” the Property Council said.
“Market forces have led to the growth of the private markets in Australia, reflective of a global shift in capital allocation, as well as developer and investor preferences.”
The Property Council urged ASIC to avoid reforms that could unintentionally stifle private sector investment by importing standards meant for public markets.
“This includes imposing public market governance standards on the private market, or further penalising private investment structures.
“We strongly advise ASIC to avoid any punitive action on private market participants in order to achieve a policy outcome for the public market.”
