Private Credit Regional Spotlight

OVERVIEW

While heightened uncertainty constrains near-term capital flows, elevated yields, strong credit fundamentals and an improving real estate market continue to provide opportunities with attractive investment prospects for private credit.

• Market volatility has increased, driven by shifting macro headlines. In the near term, this will slow capital deployment but the underlying investment thesis for private CRE credit remains intact. 
• While short-term volatility will persist, market fundamentals remain sound; we believe policy rates will ease but stay above prior-cycle lows; and real estate is broadly at fair value,1 helping to anchor prices and reduce downside risk. 
• The investment backdrop for private CRE credit remains supportive. Elevated yields, solid credit fundamentals and an improving real estate market enhance the forward return potential of these strategies. 
• Liquidity is broadly back, with greater lender participation helping to stabilize pricing and support a healthier lending environment going forward. 
• With the global CRE debt market now estimated at $11.9 trillion – on par with traditional fixed income – investor attention is growing. Private credit funds are scaling rapidly to meet this demand, with real estate debt funds AUM expected to reach $746 billion in 5 years.