Private Credit Set Expand Apac Wont Displace Banks Knight Frank
Asia-Pacific (Apac) has long been known as a secure and core market for real estate, but the landscape is changing. According to a report by Knight Frank on Oct 2, this presents a prime opportunity for private credit to take off in the region.
The report highlights that markets in Apac that were once considered stable and immune to funding shortages are now facing a lack of financing for refinancing or new developments. This scenario has created the perfect environment for private credit to flourish. Hong Kong is a clear example of this, where the availability of real estate credit has declined due to the readjustment of asset values.
Simon Mathews, a Director in Knight Frank’s Capital Advisory business for Asia-Pacific, acknowledges this shift in the market. He notes that although the amount of dry powder available for private credit has grown, Apac still lags behind significantly in terms of private credit deals. As of June 2025, Apac only accounted for 5% of the global total, in terms of the target fundraise amount, in comparison to North America.
Moreover, out of all the real estate debt in Apac, private debt only accounts for 3% in developed markets (such as Australia), compared to 12% in North America and 10% in Europe. Knight Frank identifies Australia as the leading private credit market in Apac.
The report explains that most developed Apac economies, including Singapore, Australia, and Japan, tend to have a higher savings rate than borrowing rate. This results in sufficient deposits and low loan-to-deposit ratios for banks, allowing them to actively seek lending opportunities rather than avoiding them.
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On the other hand, banks in the US and Europe often face deposit shortfalls and higher regulatory capital costs, which lead them to shift their real estate and other capital-intensive exposures into the institutional market. This creates a competitive environment for private credit in the West, which is not the case in Apac.
In Apac, private credit does not disrupt banks in the same way as it does in the West. Instead, banks continue to be major providers of real estate loans, while private credit fills the gaps where banks are less active, such as higher-risk developments, refinancing stress, cross-border transactions, or cases that require additional leverage.