Lenders Sentiment Survey H1 2023

Credit market conditions are very topical in conversations with developers and investors.  Our 1H 2023 survey of Australian CRE lenders in May finds:

• Moderate decrease in lending appetite since our 2H 2022 survey but 32% still want to grow their book
• Industrial remains a favoured asset class with more than 4/5 expressing a preference to lend into that sector. Domestic banks also tilt towards Stabilised Office and Non-banks towards Resi-to-rent and Resi-to-sell
• Credit margins could continue to see upward pressure of approx. 20 bps over the next three months
• ICR requirement of 1.5x for new investment and LVR requirement of 40%-60%, favoured by majority
• Slight up-tick in hedging requirements. Separately CBRE note that the current level of fixed rates has increased the attractiveness of interest rate caps as a hedging mechanism. 
• 40%-60% pre-lease preferred for new developments.