CBRE survey shows industrial assets remain preferred, but changes are underway
Data centres have surged in popularity as a preferred asset class for lender funding in Australia, following Blackstone’s recent $24 billion acquisition of data centre operator AirTrunk.
The latest CBRE Australia Lender Sentiment Survey shows data centres have risen to the third most preferred sector for lender investment, trailing only industrial and build-to-sell assets. The survey, which polled 40 local and international banks and non-bank lenders, highlights a shift in asset preference as both domestic and offshore lenders reassess their portfolios.
According to CBRE, industrial properties remain the top choice for lenders, driven by solid sector fundamentals. Build-to-sell residential assets still hold the second position, though interest in this category has declined for three consecutive periods as data centres gain traction.
“Data centres experienced the largest half-on-half increase to become the third most preferred asset class amongst Australian lenders,” said Andrew McCasker (pictured), CBRE’s managing director of debt and structured finance. “Globally, investment interest in data-centre assets has increased substantially following a rise in data storage requirements, cloud computing and technological advancements.”
Also commenting on the findings of the Lender Sentiment Survey, Darcy Frawley, CBRE Pacific Data Centres capital markets director, noted that occupiers are now competing aggressively to increase their data centre footprint to accommodate future business needs.
“Australia is set to see a large gap between capacity and demand in the medium term, which will lead to significant rental growth and make the sector even more appealing for data centre investors,” Frawley said.
The survey also found that more than 80% of lenders expect at least one RBA interest rate cut by June 2025, with roughly one-third anticipating that the cash rate will ease to 3.6% by the end of 2025, marking a 75-basis-point reduction.
Loan demand remains steady, with 60% of lenders indicating a willingness to increase new loan commitments over the next three months, consistent with levels reported in the first half of 2024.
Most lenders (73%) also reported little change in covenant breaches over the past six months and expect similar stability moving forward. This marks a shift from the first half of the year when 43% of lenders expected breaches to rise, a change attributed to stabilising economic conditions.
The survey also noted that leverage and asset type are the two primary factors influencing refinancing decisions in the latter half of 2024.
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