Source: Investor Daily
Author: Adrian Suljanovic
Date: 25 June 2026
Rapid private credit growth is drawing more investors but industry leaders warn education has failed to keep pace with the expanding demand.
Australia’s booming private credit market is attracting growing numbers of investors, but industry participants have warned that investor understanding of the asset class is failing to keep pace with its rapid expansion, increasing the importance of due diligence and manager selection.
Real estate private credit investment manager Zagga said Australia’s private credit market had grown to about $235 billion in assets under management, delivering a compound annual growth rate of 21 per cent over the past decade compared with around 5 per cent for bank debt and bonds.
The firm said the sector was on track to overtake the local bond market by assets under management by 2029, reflecting its evolution from a niche allocation into a core source of portfolio diversification and commercial financing.
Zagga chief executive and co-founder, Alan Greenstein, said the pace of capital inflows had created a widening gap between investor participation and investor knowledge, particularly as private credit strategies have become increasingly diverse.
“Private credit can offer investors significant upside with stable income, attractive risk adjusted returns, and uncorrelated portfolio diversification. As macro headwinds intensify and fiscal policy tightens, this appeal has seen more investors – from institutions to individuals – drawn to the asset class,” Greenstein said.
While demand continued to strengthen, Greenstein cautioned that investors should not view private credit as a single, uniform asset class, noting that underlying strategies could carry materially different risk characteristics.
“Yet, not every investor has the experience or expertise to understand the complexities of private credit and the vast and varied opportunities within it. For example, US corporate credit carries a significantly different risk profile to Australian real estate private credit.
“We have seen global investors caught unaware by this, with the current rhetoric around gating and liquidity highlighting the need for more investor education.”
The expansion of the market is also changing the profile of investors allocating to the sector.
According to Zagga, private credit, once largely the domain of institutional investors, is increasingly attracting family offices, sophisticated investors and self-managed superannuation funds seeking alternative sources of income and diversification.
Citing UBS research, the firm said almost 80 per cent of family offices intended to maintain or increase their private credit allocations over the next five years, while high-net-worth investors and SMSFs now account for more than 50 per cent of Zagga’s assets under management.
The company said investors were increasingly looking to private credit backed by real assets as traditional diversification became more difficult to achieve in the current market environment.
Greenstein said the growing opportunity also heightened the need for investors to understand how managers deployed capital and managed risk.
“To realise these benefits, investors must do their due diligence – understand how their capital is invested, where it is being deployed, who is managing it (experience and track record), and what risks are associated. As an industry, we have a responsibility to act with transparency, ensuring our investors can access and understand this detail.”
The comments coincide with Zagga’s ninth anniversary and the launch of an educational whitepaper series designed to improve investor understanding of Australian real estate private credit.
The first publication examines the changing investment landscape, global private credit risks and opportunities, Australia’s position relative to offshore markets, and the role governance and risk management play in preserving investor outcomes.
Greenstein said Australia continued to stand out within global private credit markets because of its quality underlying real estate assets, resilient economy, regulated lending market and favourable property market fundamentals, but argued those advantages made manager expertise and governance even more important as competition intensified.
Commercial real estate lending now accounts for around 18 per cent of Australia’s private credit market, representing approximately $92 billion of invested capital, according to Zagga.
The firm said it had deployed around $3 billion across more than 350 Australian real estate transactions since inception, grown its investor base to more than 1,000 entities globally and was on track to close the financial year with around $1 billion in new originations.
Following 50 per cent year-on-year growth, Zagga is targeting $5 billion in assets under management (AUM) by 2030.
Greenstein said experienced managers would increasingly be judged on their ability to guide investors through changing market conditions as well as deliver investment performance.
“The ability to deliver across market cycles is now the baseline for trust. Experienced, specialist managers need to do more – we need to act as true partners, securing trust and transparency by ensuring investor education keeps pace with capital allocations. As growth of Australian private credit accelerates, so too must our best practice commitments to investors.”
