A wall of debt is coming due in the Asia Pacific. Loans struck at record-low rates before 2022 are maturing into an era of higher costs and tighter bank scrutiny. For developers and corporates, refinancing through traditional lenders is no longer a given. At the same time, the region is urbanising on a scale without precedent—over a billion households set to join the middle class within the next decade, demanding new housing, logistics hubs, and data infrastructure. Into this mismatch of rising demand and retreating credit, global investors are moving decisively. While allocations to Europe and the U.S. slowed this year, cross-border flows into Asia Pacific real estate climbed 40 percent. And increasingly, that money is chasing private credit which is visible from below:
- A significant refinancing wave of over US$8 billion in Asia Pacific real estate debt requires new funding amid rising costs and constrained traditional lenders, offering a prime opportunity for private credit.
- Asia Pacific's rapid urbanisation, with over one billion rising middle-class households by 2034, is driving large-scale demand for housing, logistics, and data infrastructure that banks are reluctant to fully finance.
- Global cross-border investment is shifting markedly toward Asia Pacific real estate private credit, with the region capturing a growing share of capital flows, especially in cities like Tokyo and increasingly through private credit rather than traditional financing.
The Refinancing Crunch
The catalyst is structural. Between 2024 and 2026, more than US$8 billion in Asia Pacific real estate debt is projected to require refinancing. Most of it was issued during years of ultra-low rates. Today, the same borrowers face financing costs two or three times higher. Banks, already constrained by Basel III and IV capital rules, have little appetite to roll over those loans on favourable terms. Insurers, another traditional source of credit, are constrained by new accounting standards that require closer matching of liabilities and assets.
For developers, that means fewer options at precisely the moment capital is needed most. For investors, it means a rare window: private credit can step in with speed, flexibility, and bespoke structures that banks cannot provide.
Urbanisation Meets Capital Shortage
The demand side of the equation is equally powerful. Asia Pacific already accounts for more than half of the world’s urban population. By 2050, that number will increase by 50 percent. By 2034, over one billion households in the region will join the middle class.
This is not an abstract demographic shift. It translates directly into concrete demand: housing projects in Sydney and Seoul, logistics facilities in Mumbai, retail and office redevelopments in Tokyo, and a surge in data centres from Osaka to Singapore. These are capital-intensive undertakings, and the funding requirements stretch far beyond what banks are willing to extend.
Private credit offers a different model. Lenders can underwrite construction finance, provide transitional loans, and deliver higher loan-to-value ratios. The cost is higher, but so is the flexibility—and for sponsors racing to meet market demand, that trade-off makes sense.
Global Capital Tilts East
The shift is not just regional. It is global. In the first half of 2025, cross-border investors deployed nearly US$19 billion into Asia Pacific real estate outside Greater China—a 40 percent jump from a year earlier. Tokyo alone accounted for US$13.2 billion, cementing its position as the most liquid city for international real estate capital.
At the same time, U.S. investors pulled back in Europe, with allocations falling nearly 30 percent. The comparison is telling. Asia Pacific offers scale, growth, and entry pricing that other regions struggle to match. For investors with global mandates, the question is no longer whether to allocate, but how. And increasingly, the answer is private credit—where spreads are wider, structures more protective, and opportunities tied directly to the region’s growth story.
From Distress to Performing Credit
Until recently, Asia Pacific private credit was largely synonymous with distress. In the years following the Asian Financial Crisis, most funds focused on special situations—buying bad loans or providing rescue financing—often earning returns in the 18 to 20 percent range. That legacy kept private credit on the periphery of mainstream portfolios.
The new opportunity is different. Performing credit—core-plus and value-add strategies that deliver returns of 8 to 15 percent—is still underdeveloped in the region. In the U.S., private credit accounts for more than 40 percent of real estate financing. In Europe, it is roughly 20 percent. In Asia Pacific, it is only 6 percent. The gap is not just statistical; it is a measure of the market’s untapped potential.
Fundraising reflects the change. Between 2020 and 2024, managers raised over US$11 billion for Asia Pacific real estate private credit strategies, a 42 percent increase over the previous five years. Average fund sizes have now surpassed US$100 million. Institutional allocators—pensions, sovereign wealth funds, and family offices—are driving that growth, looking for scalable platforms where they can deploy capital consistently, not one-off opportunities.
Country Spotlights
Australia is the region’s most developed market for private real estate credit. The sector was valued at A$85 billion at the end of 2024 and is projected to reach A$153 billion by 2028. Regulators allow non-bank lending without a banking license, and tax incentives make the market particularly attractive for international managers. Developers favour private lenders for higher loan-to-value ratios and flexible structures, even at higher margins. With gross loan-level IRRs often in the mid-teens, investors view Australia as the anchor of the region’s private credit market.
South Korea has emerged through regulatory redirection. Domestic banks, under policy pressure to reduce property risk, have sharply pulled back from project finance. Non-bank exposure has grown at a compound annual rate above 20 percent since 2020, reaching roughly US$118 billion by 2024. State-linked allocators, including Korea Post, have issued mandates to increase private credit allocations, creating a supportive backdrop for foreign investors. Opportunities range from refinancing and recapitalisations to development funding, often through partnerships with local platforms.
Singapore, while smaller in size, is pivotal for regional strategy. Its banking sector still dominates commercial real estate lending, leaving private credit concentrated in opportunistic and event-driven deals—shareholder restructurings, distressed recapitalisations, mezzanine loans. But its role as a hub for family offices and global managers makes it the operational and fundraising centre of gravity for Asia Pacific private credit.
Beyond mezzanine and distressed debt, Singapore’s position as a hub for family offices and global asset managers facilitates expansion and innovation in private credit markets. Family offices are increasingly allocating to private credit looking for yield, diversification, and bespoke opportunities tailored to their unique needs. This influence expands private credit in Singapore through several means:
- Product Innovation and Retail Access: Singapore is at the forefront of creating retail-accessible private market products like private credit ETFs and long-term investment funds (LIFs) approved by regulators. This trend democratizes private credit access and broadens capital sources beyond traditional institutional investors.
- Multi-Family Office and Integrated Banking Solutions: Banks in Singapore offer integrated platforms combining advisory, financing, and wealth management, helping family offices structure complex private credit deals and co-investments. The availability of specialized multi-family office structures leverages Singapore’s regulatory and tax environment to attract private credit capital.
- Bespoke and Diverse Structures: Singapore’s flexible legal framework supports a range of private credit structures including direct lending, unitranche, mezzanine, distressed debt, convertible debt, and quasi-equity instruments. Features like cram-down schemes and pre-pack arrangements enhance creditor protections, improving deal feasibility.
- Cross-Border and Regional Connectivity: As a regional financial hub, Singapore facilitates cross-border private credit flows and partnerships, giving investors access to broader Asia Pacific opportunities. Family offices use Singapore to coordinate multi-jurisdictional private credit investments, leveraging its connectivity and financial infrastructure.
These factors suggest private credit in Singapore could expand into more diverse and creative deal types, such as blended debt-equity instruments, private credit co-investment platforms, and semi-liquid retail strategies. The ecosystem’s growth will likely also drive more direct lending to innovative sectors like technology infrastructure and sustainable real estate projects, expanding beyond traditional real estate credit niches.
Timing and Entry Points
From a tactical perspective, the timing is favourable. Real estate values across Asia Pacific are still recalibrating after the rate shock of 2022. Spreads remain wide, risk-adjusted returns attractive, and asset values provide room for appreciation. Even as interest rates edge downward, they remain above pre-pandemic norms, preserving the premium for private credit.
For investors, that creates a dual opportunity: to capture near-term spreads while positioning for long-term growth. The real prize, however, is structural. Unlike past cycles where opportunities were tied to dislocation, the current momentum is underpinned by fundamentals: demographic expansion, regulatory reform, and the institutionalisation of non-bank capital.
Execution and Risks
Yet opportunity comes with complexity. Asia Pacific is not a single market but a mosaic of jurisdictions, each with its own legal system, regulatory framework, and borrower practices. Deals are privately negotiated, creditor protections vary, and execution risk is high.
A lender active in Sydney must understand zoning rules and construction covenants; one investing in Seoul must navigate leverage dynamics and corporate debt structures; in Singapore, mezzanine finance requires careful alignment with local bank syndicates. Standardised playbooks that work in the U.S. or Europe are not enough. Success depends on local expertise, strong networks, and the ability to tailor structures market by market.
From Margins to Mainstream
The perception of private credit as “capital of last resort” is fading. In Asia Pacific real estate, it is increasingly viewed as a core allocation—yielding steady income, providing downside protection, and linking directly to the region’s long-term growth.
For investors, the question is not whether private credit in Asia Pacific will grow, but how quickly—and who will establish themselves as the platforms of choice. Those who move early can secure wider spreads, favourable structures, and long-term positions in markets that are still opening up.
What is clear is that private credit is no longer a niche strategy in Asia. It is becoming the financing backbone of the region’s real estate future.
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