Morgan Stanley researchers have suggested greater disclosures to assess credit risk tied to property developers, following the collapse of Sydney’s Bathla Group. More information would help give investors clarity on bank exposure to risks in the sector, while also shining a light on the opaque market for private credit, where real estate developers have increasingly turned to for funding, the Wall Street bank’s analysts say. Around A$3.4 billion is owed to creditors after Bathla fell into insolvency in August.

The analysts argue that enhanced transparency would allow stakeholders to better evaluate the financial health of developers and the systemic risks posed by private lending in real estate. They emphasize that current disclosure practices are insufficient to gauge the true scale of exposure, particularly as non-bank lenders play a growing role in financing construction projects. The Bathla case underscores the need for standardized reporting to improve market stability and investor confidence.