Predictions for the Property and Private Credit Market in 2026

As the property and private credit markets move into 2026, sentiment is notably more constructive than it was at the start of 2025. While there is talk of rate rises early in 2026, the sector appears to have passed through the most uncertain phase of the cycle. Greater clarity around costs, pricing, and capital availability is helping both developers and lenders plan with more confidence, setting the stage for a more active—but still selective—market environment.

One of the most important shifts is the renewed confidence in the property market itself. At the beginning of 2025, many projects were paused as developers grappled with volatile construction costs, high interest rates, and uncertain exit values. By contrast, construction costs have now largely stabilised. While they remain elevated compared to pre-pandemic levels, the unpredictability that caused so much hesitation has reduced significantly. This stability allows developers to underwrite projects with greater certainty, and as a result, more schemes are moving from the planning phase into execution. Developers who delayed decisions over the past 18 to 24 months are increasingly prepared to proceed, particularly on well-located residential and industrial projects where demand fundamentals remain strong.

Within the private credit market, competition is also expected to remain robust as the number of private credit providers active in real estate remains substantial. Debt funds, family offices, and specialist lenders continue to hold significant dry powder and are keen to deploy capital into quality opportunities. In 2026, this will translate into continued strong competition for good projects—those with strong sponsors, realistic leverage, and clear exit strategies. Well-structured deals are still likely to attract multiple financing options, keeping pricing and terms competitive for the strongest borrowers.

However, not all borrowers will benefit equally. A key theme for 2026 is the growing challenge around valuation uplift. Many sites acquired in in prior years have benefited from year-on-year increases in the land value, enabling borrowers to continue refinancing their loans while the sites remain undeveloped.  2026 is likely to see more subdued real estate price growth and borrowers may find valuation uplift is no longer a given.  This will create pressure for those borrowers and also lenders who have adopted an “extend and pretend” approach—rolling over loans in the hope that time will resolve leverage issues. We believe leverage levels have now peaked, and lenders are increasingly reluctant to continue extending facilities against static valuations and elevated loan-to-value ratios.

This shift is likely to have meaningful consequences. As lenders push for resolution rather than extension, more sites may be brought to market. While this may be challenging for over-leveraged owners, it also creates opportunities. Experienced developers with access to capital and the ability to move quickly could find attractive acquisition opportunities, particularly where projects require restructuring or fresh equity. In this sense, 2026 may mark a transition to opportunity-driven activity, rewarding discipline, experience, and realistic underwriting across both property and private credit markets.