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APAC investors bullish on private debt, real estate despite economic challenges

Despite high inflation and rising borrowing costs affecting leveraged private-market investments, institutional investors in Asia-Pacific remain committed to increasing their allocations in private assets, particularly in real estate and private debt, according to a State Street report. The report surveyed 120 Asia-Pacific-based institutional investors, revealing that 58% expect regional inflation to rise further, and 65% view high borrowing costs as a major challenge. Nonetheless, 78% plan to boost their short-term investments in private debt, citing its appeal amidst stagnant deal flows and valuation discrepancies. Furthermore, 60% intend to allocate over 30% of their portfolios to private markets within three years, driven by optimism about China’s recovering real estate sector and regulatory support, signalling a significant shift from public to private investments.


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