Private credit is set for expansion in Apac under selected conditions but is unlikely to displace banks, Knight Frank says
In a report released on Oct 2 on private credit in real estate, Knight Frank believes Apac is ripe for a take-off in private credit.
“Markets (in Apac) that have traditionally been secure and core over the long term but are now facing a lack of funding for refinancing or new developments present an ideal scenario for private credit. Hong Kong is a clear example of where the availability of real estate credit has contracted as asset values have been rebased,” notes Simon Mathews, a Director in Knight Frank’s Capital Advisory business, covering Asia-Pacific.
Although so-called dry powder in private credit has expanded, Apac lags significantly in private credit deals. As of June 2025, Apac accounted for only 5% of the global total, based on the target fundraise amount compared to North America. Developed Apac’s private debt accounted for only 3% of all real estate debt (Australia has also emerged as APAC’s leading private credit market), compared to 12% for North America and 10% for Europe.
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Most developed Apac economies (i.e. Singapore, Australia and Japan) are net savers. Many such markets operate with ample deposits and low loan-to-deposit ratios, leaving banks in a position of actively seeking lending opportunities rather than retreating from them.
“By contrast, banks in the US and Europe often face deposit shortfalls and higher regulatory capital costs, making them more inclined to shift real estate and other capital-intensive exposures into the institutional market,” Knight Frank indicates.
As a result, 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 where banks are less active such as higher-risk developments, refinancing stress, cross-border transactions, or cases requiring additional leverage.