According to Knight Frank's Horizon Report: The Rise of Real Estate Credit in Asia-Pacific – Bridging the Gap, India has emerged as a top two private credit market in real estate, in the whole of the Asia-Pacific region. India is said to have accounted for 36% of the total fundraising in the region from 2020 to 2024.
In the report it is mentioned that India's private credit assets under management (AUM) have exploded very dramatically going from only USD 0.7 billion in 2010 to USD 17.8 billion in 2023, a trend that is mostly due to the market's rapid institutionalization and investor confidence. India is predicted to account for 20–25% of the total regional private credit expansion of USD 90–110 billion by 2028 after it has been supported by regulatory changes, diversified funding structures, and ongoing demand for flexible financing.
The APAC real estate private credit market has been able to raise USD 11.2 billion in the period from 2020 to 2024. This is a 40% increase from USD 8 billion raised in 2015–2019. In this period, Australia is the largest contributor to the total capital raised, making up 40% of it and thus, pointing to the predominance of mature markets. Meanwhile, India's contribution has been consistently increasing because of regulatory reforms, developer demand, and investor interest.
The APAC is set to raise private credit to the tune of USD 90–110 billion between 2025 and 2028. India is anticipated to make up 20–25% of this total. Australia, on the other hand, is estimated to be responsible for close to 50% of the total as the result of more stringent bank lending policies and increasing demand for flexible financing structures.
As per the Knight Frank report, developers' escalating dependence on non-bank capital in the face of tighter regulations and more selective lending by banks has been the main factor behind the brisk advance of private credit. Institutional investors—such as family offices and global private equity firms—are eager to grab the opportunities presented in residential development, refinancing, and special situations.
Shishir Baijal, Chairperson and Managing Director, Knight Frank India, commented, “Developers are increasingly turning to structured and alternative financing to bridge capital gaps and meet rising urban housing demand. As interest rates globally remain elevated, private credit offers a compelling avenue for investors seeking higher yields with tangible underlying assets.”
Private Credit and India’s Real Estate Market
The bank credit in India had a compound annual growth rate (CAGR) of 11.6% between 2015 and 2025 and went up to Rs 182.4 trillion. The housing sector was the major growth driver having a CAGR of 16.9% and reaching Rs 30.1 trillion. The commercial real estate also increased at a 12.2% yearly rate and went up to Rs 5.3 trillion, a rise that was supported by the economic expansion and the infrastructure and housing initiatives led by the government.
Private credit has spread its wings far beyond the traditional development finance area. More and more structured debt, last-mile funding, and special situation funds are being used for the revival of projects that have been stalled and for providing liquidity to developers during the cycles.
The report says that investor engagement in India is now a journey through performing credit and distressed or special situation assets. Foreign portfolio investors have traditionally been at the forefront, while the Securities and Exchange Board of India (SEBI)-regulated Category II Alternative Investment Funds (AIFs) have changed the game by providing high-return potential, longer horizons, and regulatory flexibility.
,The growth of India’s private credit AUM has been phenomenal and this is very much indicative of the deeper institutional participation and the growing investor confidence.Lalit Parihar, Managing Director, Aaiji Group, Dholera-based real estate company, noted, "India’s ascent as one of the most dynamic real estate private credit markets in Asia-Pacific reflects the deepening maturity and resilience of the sector. The rapid growth in private credit AUM—from under a billion dollars a decade ago to nearly USD 18 billion today—demonstrates strong investor confidence and the success of regulatory reforms that have enhanced transparency and broadened financing avenues. As India is poised to contribute up to a quarter of the region’s private credit growth by 2028, we see tremendous opportunity for well-capitalised, forward-thinking developers. At our company, we believe this evolving credit landscape will enable us to accelerate high-quality development, strengthen partnerships with institutional investors, and continue delivering long-term value to our stakeholders."
Residential Sector Leads Private Credit Growth
During the last ten years, the residential segment has been the main driver of private credit investments with a share of more than half in most of the years. This trend continued even during housing downturns when the residential segment attracted more than half of the private credit investments due to flexible lending terms. Offices accounted for 17% of the total investments, industrial projects 5% (USD 852 million), retail 2% (USD 251 million), while the rest was spread across diversified and township projects.
Private credit is the main factor that changes the Indian real estate market to a more sustainable and client-friendly one by yielding 12–21% internal rate of return (IRR) as compared to the conventional instruments. The report added that different structures like mezzanine debt, bridge loans and preferred equity continue to rejuvenate the segments which are stalled and have been neglected, for example, affordable housing
Harry Chaplin Rogers, Director, International Capital Markets, Knight Frank India, explained, “Private credit has become a viable option for India’s real estate developers, enabling faster access to tailored capital for land acquisition, construction, and refinancing. As more developers opt for these flexible structures over traditional funding options, investor appetite is expanding and processes are becoming more streamlined, ultimately positioning private credit as a key driver of the sector’s next growth phase.”
AIFs registered have grown from 143 in March 2015 to 1,532 in March 2025, a 52% CAGR over the ten years, thus showing the gradual participation of investors and the maturity of the market. Knight Frank, therefore, arrives at the conclusion that private credit is not a niche anymore but a widely accepted financing source, thus giving the necessary support to developers and providing high returns to investors, which is why it is becoming firmly established as a key factor of the sector's growth in India's real estate market over the next ten years.
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