Asia Pacific debt: non-bank lenders get in on the act

Non-bank lenders will account for an increasing share of real estate deals in Asia Pacific as volatility in public markets forces banks to take a more cautious approach to lending.

“Restrictive monetary policies have led to capital value corrections and banks taking a more conservative stance to lending,” says Pamela Ambler, Head of Capital Markets Research at JLL Asia Pacific.

Although non-bank lenders have gained prominence in the US and Europe – accounting for 67 percent and 47 percent of credit in the market respectively – Asian banks still hold approximately 80 percent of loans issued in the region.

But as they look to offload debt to bolster their balance sheets, this presents a growing avenue for non-bank lenders, including credit funds, to step into the market and provide alternative financing.

"Even among the large banks, sentiment has really changed because it's gone from them wanting to hold on to these loans and wait for things to improve, but that's not happening,” adds Ambler.

Banks are looking to reduce their commercial real estate exposure and half of lenders have already increased scrutiny of CRE opportunities, with 44% exploring foreclosure and 30% considering selling loans if their watchlist - assets at risk of default - increases significantly.