As Australia’s development landscape grows more complex, developers are being urged to scrutinise their lenders with the same intensity they reserve for builders, consultants, and contractors.
Speaking to The Urban Developer, MA Financial managing director Drew Bowie says the message is clear: poor credit relationships can destroy projects—and even businesses.
The private credit market in Australia has grown rapidly in recent years, now accounting for about 15 per cent of the debt market.
And while this is significantly lower than the 60 per cent seen in the United States and 55 per cent in the UK and Europe, there is room for expansion, according to Bowie.
But with that growth comes some growing pains and many new entrants and inexperienced players flooding the space, which creates a broad spectrum of lender quality, he says.
“There’s been huge growth in private credit, but the experience within the sector is spread thin,” Bowie says.
“The financing side of a project is absolutely critical—bad credit can be business-destroying.”
One of the key risks in working with certain private lenders is their short-term outlook.
Many are raising funds on a deal-by-deal basis, lacking the capital stability that can carry a project through inevitable bumps in the road, Bowie says.
“Developers know that projections will change,” he says.
“What they need is a lender who understands that too—a partner who can collaborate in decision-making that is in the best interests of the underlying property when things get tough, not one who’s looking for the exit.”
MA Financial is an ASX-listed global alternative asset manager specialising in private credit, real estate and hospitality, with their total assets under management reaching $9.9 billion in 2024.
Too often, developers focus solely on the interest rate or headline terms of a loan, ignoring the more subtle signals of risk.
For example, some lenders benefit financially when a loan goes into default, creating a potential conflict of interest. Others are subject to fund redemptions, which can suddenly limit their capacity to support a project if challenges arise.
“Understanding where your lender’s money comes from—and what promises they’ve made to their investors—can give insight into how they might behave when the market turns,” Bowie says.
The cheapest money is not always the best option.
The future of successful development financing may rest on moving beyond transactional relationships, according to Bowie.
Developers are being encouraged to seek out capital partners who bring more than just money to the table—partners who share insights, offer support, and take an active role in risk management.
“You’re paying a lot for capital. The question is, are you getting the full value?” he says.
“Tapping into your lender’s data, market intelligence, and project oversight can mean the difference between success and failure.”
MA Financial captures rich data points across the industry, which can help to inform decisions.
“We think that to be able to support the industry over long periods of time, and that is our intent as an ASX300 listed company, we need to be active managers,” he says.
“So we ourselves learn so we can make informed decisions, we can say no to the deals that we should be saying no to.”
Just as developers scrutinise the builders and agents they work with, the same rigour should apply to lenders.
Key questions include:
Who are the decision-makers, and where are they based?
How long has the fund been operating?
Is the fund susceptible to redemptions?
Does the lender have experience in your market?
What happens if the project timeline or cash flow shifts?
“We’ve seen lenders walk away at the first sign of trouble because they never truly understood the risk in the first place,” Bowie says.
“That’s not a partner you want in your corner.”
The market is entering a more challenging period. With interest rates, construction costs, and global investment conditions all shifting rapidly, developers can’t afford to treat financing as an afterthought.
“This is about building win-win relationships. If the lender doesn’t understand your project—or worse, doesn’t care—then when things go wrong, they won’t be there to help.
“Doing due diligence on your lender isn’t optional anymore. It’s critical.”
The Urban Developer is proud to partner with MA Financial to deliver this article to you. In doing so, we can continue to publish our daily news, information, insights and opinion to you, our valued readers.
