The expansion of real estate private credit across Asia Pacific is largely driven by a structural mismatch between banks tightening lending parameters and increasingly complex borrower requirements. A wholesale withdrawal of banks is neither likely nor necessary to support the market. Rather, the opportunity for debt funds and other nonbank lenders lies in financing assets and business plans that sit outside standard bank constraints, particularly where projects are operationally complex, transitional or capital-intensive, and require greater leverage and faster execution. “Financing that requires a certain time or size may not be served by major banks, so that is where private credit comes in,” says Arjun Pandit, managing director, private funds (credit), at CapitaLand Investment (CLI).
In many cases, the relationship is collaborative, rather than competitive. Debt funds finance development or repositioning before a bank refinances the asset once income has stabilised an
