Hong Kong poised for first listed property debt fund as banks pull back

As traditional banks retreat from higher-risk commercial real estate lending, private equity firms are stepping in to fill the funding gap in Hong Kong's property sector. Gaw Capital, a Hong Kong-based real estate private equity fund, has filed to launch the city's first listed property debt vehicle, a move that could further bolster the market.

The fund, Gaw Capital Real Estate Private Debt OFC, aims to target a HK$2.29 billion pipeline of deals across various Asian nations, with a focus on internal rates of return exceeding 10% per annum. The rise of the property private debt market in the Asia-Pacific region and the Middle East is expected to surpass US$372.7 billion by 2030, with private debt's share of real estate financing projected to grow to 12.8% in 2030.

Gaw Capital plans to distribute quarterly returns, though dividends are not guaranteed. Managed by Gateway Capital (Hong Kong) and overseen by DB Trustees (Hong Kong), the fund will be structured as a closed-ended Open-ended Fund Company (OFC) on the Hong Kong stock exchange, offering investors a non-bank, asset-backed lending strategy that traditionally appeals to institutional and high-net-worth individuals.