Debt funding gap in APAC real estate minimal: CBRE

Singapore is seen bucking the trend with plenty of dry powder.

Asia Pacific’s real estate sector is projected to record about US$8.4b in debt funding gap from 2024 to 2026, smaller than those of Europe and the United States due to plenty of dry powder in select markets like Singapore, a study by CBRE showed.

In a recent report, CBRE said the debt funding gap will be driven by the office sector which is forecasted to post a gap of US$6.1b in the next three years, occurring mainly in Australia and mainland China. 

The gap will also be mostly caused by a huge drop in capital values of properties, led by Australia, mainland China and Hong Kong.

It said investors will likely struggle to arrange refinancing discussions, as seen in the steep discounts recorded in office deals so far this year.

Singapore is seen bucking the trend with a forecasted debt funding surplus of over US$1b by 2026.

“With limited distress in Asia Pacific, fund raising for debt strategies will remain limited in 2024, leaving investors to instead focus on traditional strategies such as value-add and core,” CBRE said.