Private credit lenders are circling distressed property developers in Hong Kong, with a record US$23.4 billion (S$31.3 billion) of bank loans coming due in 2024 for the downtrodden sector.
The potential funding gap is drawing a range of players including family offices, private equity firms and asset managers, such as PACM Group Holdings that can stomach offering highrisk, high-yield loans for collateral assets in one of the world's most expensive property markets.
"There are family offices and asmanagement companies set which are establishing this new business line, just as private credit funds," said Ms Jasmine Chiu, a Hong Kong-based lawyer in real estate finance practice at Mayer Brown. "They all seek to increase their portfolios for private credit."
The opportunity is underpinned by Hong Kong's listless market conditions, with revenues from office buildings and retail space staggering just as finance costs surged. While the city's real estate sector has not undergone anything near the crash souring China, home sales have plunged while vacancy rates soared. Many developers also operate on both sides of the border, and cratering valuations in the world's second-largest economy have had spillover effects.
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