The Aussie private credit firm’s loan book has grown significantly since it launched across the Tasman in 2022.
Pallas Capital has written more than $1.29bn of loans in New Zealand since setting up shop there four years ago, Green Street News can reveal.
The average loan written by the Australia-based nonbank lender is $6m, reflecting its focus on mid-market borrowers seeking a lender with balance-sheet depth and the ability to fund a project through its full lifecycle.
Executive director Dan Gallen said New Zealand’s funding landscape is evolving rapidly.
“Scale matters in this environment, and our intention is to bring the depth of our Australian platform to New Zealand in a way that strengthens the development ecosystem,” he said.
Pallas’ loan book is weighted toward investment lending, representing just under 48% of total exposure as of June 10. In these situations, borrowers typically are looking to refinance, reposition or acquire income‑producing commercial property.
Jason Arnold, group executive, origination, told Green Street News that construction lending accounts for around 25% of the total, though the firm is seeing more such enquiry despite a softer residential market.
Arnold said much of this demand is coming from developers preparing for the next cycle — particularly land subdivisions, townhouse projects and larger‑scale residential projects targeting delivery from 2027 and onwards.
“Across both segments, the common thread is sponsors seeking flexibility around timing, pre‑sales and leverage, which traditional lenders are finding harder to accommodate,” he said.
Arnold observed that New Zealand and Australia are moving through similar cycles though at different speeds.
“In New Zealand, we’re seeing developers look through the current softness and position projects for the next phase of demand,” he said. “Enquiry for subdivision and residential construction is rising, even as the broader housing market remains subdued. Surplus stock is being absorbed, and confidence is gradually returning.”
Australia is slightly further along in the recovery curve, with stronger pre‑sales activity in key east coast markets.
“However, both countries are experiencing the same structural pressures: tighter bank funding, a growing reliance on non‑bank lenders, and a renewed focus on counterparty strength,” he said.
Looking ahead, Arnold said Pallas is focused on partnering with developers and investors in New Zealand on high‑quality residential and commercial projects.
“We’re focused on building a sustainable, multi‑cycle presence in the market,” he said. “That means providing certainty of funding, offering flexibility where traditional lenders cannot, and supporting projects that contribute meaningfully to local communities.”
Arnold said there is strong momentum in Central Otago and Canterbury, supported by population growth and infrastructure investment.
“Waikato and the Bay of Plenty are also gaining traction as lifestyle‑driven migration continues,” he said.
Auckland remains the most consistent source of long‑term opportunity due to its scale, depth of demand and ongoing housing undersupply.
“Across all regions, the most compelling opportunities are emerging where developers are positioning projects for delivery in 2027 and beyond, taking advantage of easing construction cost escalation, and leveraging non‑bank flexibility to progress viable projects despite bank constraints,” he said.
“With construction cost pressures still influenced by global instability (including higher fuel, freight and energy costs) developers who secure funding certainty and stabilised build costs early will be best positioned.”