Apac real estate private credit fundraising surges to US$11.2 billion amid growing appetite: report

[SINGAPORE] Asia-Pacific (Apac) real estate private credit raised US$11.2 billion in funds between 2020 and 2024, marking a 40 per cent surge that could signal the region’s growing appetite for alternative lending, a new Knight Frank report indicated.

The fundraising was led by Australia, which captured 40 per cent of the amount, according to Knight Frank’s Horizon III: The Rise of Real Estate Credit in Asia-Pacific – Bridging the Gap report. India accounted for 36 per cent, followed by South Korea at 11 per cent and Japan at 5 per cent, while other Apac markets accounted for the remaining 8 per cent.

Private credit refers to non-bank lending, where capital is provided by private funds or other institutional investors rather than traditional banks or public markets. It is one of the fastest-growing segments in capital markets across Apac, said the report, which was released on Thursday (Oct 2).

Simon Mathews, Knight Frank’s director of capital advisory, global capital markets, said that private credit is becoming an “increasingly prevalent” financing option for developers and investors across Apac, replacing or complementing traditional lending sources.

“Non-bank lenders are increasing their market share for opportunistic business plans, in markets such as Australia, India, Hong Kong and South Korea,” he said.

This comes even though traditional bank financing continues to dominate Apac credit markets, where 94 per cent of lending is conducted through banks, compared with 79 per cent for Europe and 38 per cent for the US.

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While Apac faces a private credit gap and currently represents a mere 5 per cent of global private credit fundraising, the region shows “clear momentum” for further growth, Knight Frank said. 

Real estate private credit on the rise across Apac

The rise of private credit in Apac coincides with a global resurgence of investor appetite for real estate as an asset class, Knight Frank said, noting that real estate debt fundraising has accelerated in recent times.

In the first half of 2025, the proportion of global private credit fundraising that was directed towards the real estate sector reached 19 per cent, the highest share for the asset class in the past five years.  

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This trend is forecast to continue in the Apac region, Knight Frank said. Over the next three years, the property consultancy firm projects that private credit assets under management for the real estate sector will expand by between US$90 billion and US$110 billion across Australia, Hong Kong, India and South Korea.

Australia is expected to drive around 50 per cent of this growth, while India is predicted to contribute between 20 per cent and 25 per cent. 

Knight Frank Apac head of research Christine Li said the primary advantage of private credit over traditional funding lies in the flexibility it offers.

“Private credit lenders typically have a higher risk appetite, allowing greater loan-to-value ratios and requiring fewer pre-sales commitments compared with banks. This enables developers to capture higher returns as values often improve closer to project completion,” she said. 

Growth patterns distinct from Western markets

While research suggests that private credit will continue to expand its market share across Apac, its growth trajectory in the region will be distinct from that in Western markets, Knight Frank said.

This is due to the relationship-driven banking culture and strong deposit bases of Apac markets, the firm said.

“Most developed Apac economies 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,” the report said.

“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.” 

Hence, private credit does not displace banks in Apac, but rather plays a complementary role and addresses “targeted gaps” where banks are less active, the report said. These include areas such as higher-risk developments, refinancing stress, cross-border transactions or cases requiring additional leverage.

Family offices, ultra-high-net-worth individuals among growth drivers

Private credit is becoming an increasingly important allocation for ultra-high-net-worth individuals and family offices, a trend that is underpinned by structural shifts in capital deployment, Knight Frank said.

It noted that appetite for private credit is rising as traditional private equity distributions slow down. Moreover, the volatility in public markets is increasing the appeal of privately held assets.

“At the same time, large institutional investors are reaching allocation thresholds, creating space for private wealth to play a more active role,” Knight Frank said.

The property consultancy firm noted that family offices typically have a “buy-and-hold” mentality, making them comfortable with illiquid asset classes such as private credit.

“In Apac, where family offices are increasingly focused on capital preservation, intergenerational wealth planning and balanced portfolio construction, private credit is expected to see sustained growth as a stabilising, yield-oriented investment option,” the report said.

Citing data from BlackRock’s 2025 Global Family Office survey, it noted that nearly one-third of respondents planned to increase their allocations to private credit – the highest proportion among all asset classes surveyed.