Private Credit Set Expand Apac Wont Displace Banks Knight Frank

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SINGAPORE (Oct 8): According to a report by Knight Frank, the Asia Pacific (Apac) region is showing signs of being ripe for a private credit take-off in the real estate sector. Simon Mathews, a Director in Knight Frank’s Capital Advisory business covering the Apac region, notes that markets in the region that have traditionally been secure and core investments over the long term are now facing a lack of funding for refinancing or new developments. This, in turn, creates an ideal scenario for private credit. He cites Hong Kong as a clear example, where the availability of real estate credit has declined due to revaluing of asset values.AdvertisementMoreover, despite an expansion of so-called dry powder in private credit, Apac is significantly lagging behind in private credit deals. As of June 2025, Apac only accounted for 5% of the global total in terms of the target fundaise amount, compared to North America. Additionally, developed Apac countries have also been falling behind in terms of private debt, only accounting for 3% of all real estate debt. This is in contrast to North America and Europe, which account for 12% and 10% respectively. Australia has emerged as Apac’s leading private credit market.However, according to Knight Frank, most developed Apac countries, such as Singapore, Australia, and Japan, are net savers. These markets operate with ample deposits and low loan-to-deposit ratios, meaning that banks are actively seeking lending opportunities rather than retreating from them. On the other hand, banks in the US and Europe often face deposit shortfalls and higher regulatory capital costs. As a result, they are more inclined to shift real estate and other capital-intensive exposures into the institutional market.Knight Frank also notes that private credit in Apac does not displace banks in the same systemic way it does in the West. Instead, banks remain competitive providers of real estate loans, while private credit fills targeted gaps, such as higher-risk developments, refinancing stress, cross-border transactions, or cases requiring additional leverage.