Mark Pratt, of firm Australian Unity, says that funds which loan via first mortgage to residential development projects offer better risk-return outcomes for investors than investing in a traditional property fund.

Speaking at a webinar hosted by Australian Unity, Mr Pratt said that real estate debt investments are a “reasonable rate for the risk people are taking.”

In the same webinar, Scott Keck of Charter Keck Kramer likened the big four banks to supermarkets, and by comparison, non-bank lenders are like smaller boutique stores, which are able to offer tailored, bespoke solutions. In the case of real estate lending, these non-bank lenders are able to offer property developers the loans they require to complete their projects; loans that the big banks cannot, or will not, provide.

Mr Keck also said that private lending is now “highly disciplined, very well licensed and compliant. It’s as safe as having money in your own bank and it does provide higher returns because it’s dealing with a different sector of the market.”