Saturday, 3 October 2026
India’s property sector is entering a period in which the availability of capital is becoming almost as important as the availability of land. Large office developments, logistics parks, data centres, shopping centres and mixed-use projects require increasingly sophisticated financing structures, while developers are looking beyond conventional bank loans to fund acquisitions, construction and expansion. Private credit is emerging as an important additional source of that capital.
The scale of India’s real estate financing requirement explains why alternative lenders are gaining ground. JLL and Propstack estimated that the property sector could generate around ₹14 lakh crore, or approximately $170 billion, of debt-financing opportunities between 2024 and 2026. This figure covers the broader real estate market rather than private credit alone, but it demonstrates the amount of capital required as development pipelines and income-producing property portfolios expand.
Traditional lenders remain central to this market. Banks accounted for around 70% of real estate debt sanctioned in 2023, demonstrating that private credit has not displaced conventional financing. The more significant change is that developers now have access to a broader group of lenders. Banks, NBFCs, alternative investment funds and private-credit managers can participate at different stages of a project’s development and at different levels of risk.
Private credit has nevertheless expanded rapidly. Approximately $12.4 billion of private-credit transactions were recorded across India during 2025. A further $3.5 billion was deployed through 102 tracked transactions above $10 million in the first half of 2026. Real estate received around 35% of that H1 capital, making property the largest sector represented in the market.
The appeal lies largely in the ability to structure financing around transactions that may not fit conventional lending requirements. A completed office building with established tenants and predictable rental income can be relatively straightforward for a bank to finance. Development projects, acquisitions, refinancing, holding-company requirements or assets still moving towards stabilisation can present more complicated risks. Private lenders can provide capital with structures designed around those circumstances, usually in exchange for higher pricing.
India’s domestic investment industry is also becoming increasingly important to this market. Indian private-credit funds accounted for approximately 74% of transaction value during the first half of 2026 and close to four-fifths of the number of deals. The expansion is therefore not simply being driven by global funds searching for higher returns. A domestic alternative-credit industry is developing alongside India’s banking and NBFC sectors.
Commercial real estate could become an important beneficiary as the investment market broadens. Offices and shopping centres have established financing models based on rental income, while logistics, hospitality and data centres are creating additional demand for development and long-term debt. Large mixed-use districts can require several layers of capital over many years, making access to different lenders increasingly important.
The higher potential returns associated with private credit also reflect higher risk. Real estate remains exposed to construction delays, leasing conditions, refinancing requirements, borrower leverage and changes in asset values. Alternative lenders therefore need to assess not only the underlying property but also the developer, security package, cash flows and potential exit. Private credit should consequently be viewed as a different method of allocating and pricing property risk rather than simply a substitute for cheaper bank debt.
India’s real estate financing market is ultimately becoming more diverse. Banks remain the largest source of conventional property debt, while NBFCs continue to provide important financing and private-credit funds are expanding into areas requiring more customised capital. As India’s office, logistics, retail, hospitality, data-centre and mixed-use markets continue to grow, this wider range of funding sources could become an increasingly important part of how the country’s next generation of commercial property is financed.
Source: © CIJ.World India Research & Analysis Team
