Real Estate Takes 35% of India Private Credit as Lenders Grow More Cautious
Mumbai, Maharashtra | September 8, 2026: India’s real estate sector is attracting the largest share of private credit even as lenders see it as the sector with the highest perceived default risk. According to EY’s H1 2026 private credit update, real estate accounted for 35% of total private credit deal value, making it the biggest destination for alternative debt funding in the first half of the year.
The combination of strong funding demand and elevated risk perception is creating a more selective financing environment for developers and real estate companies.
Real Estate Remains the Biggest Private Credit Borrower
EY tracked US$3.5 billion across 102 private credit transactions above US$10 million in H1 2026. Real estate led sector-wise deployment with a 35% share, followed by healthcare at 13% and food and beverage at 12%.
For developers, this shows that private credit has become an important source of capital alongside traditional bank financing, particularly for projects requiring flexible or structured funding.
Why Developers Are Turning to Private Credit
Private credit is being used for several property-related requirements, including project financing, refinancing, acquisition financing and HoldCo funding.
This can be particularly useful for developers that need faster or more customised financing than conventional lending may provide. However, the cost of such funding and the repayment structure can have a direct impact on project profitability.
High Funding Demand Comes With Higher Risk Concerns
The biggest concern for the sector is that real estate also emerged as the market’s highest perceived default-risk sector in EY’s private credit survey.
This does not mean that the sector is facing widespread defaults. Instead, it indicates that lenders are more cautious about the possibility of repayment stress compared with other sectors.
For developers, this could translate into stricter due diligence, stronger security requirements and greater focus on project cash flows before financing is approved.
Lenders Could Become More Selective
EY's findings point towards increasing competition within India's private credit market, but also a sharper focus on risk selection and downside protection.
Domestic funds accounted for 74% of private credit deal value and about 79% of deal count in H1 2026, showing the growing role of Indian private credit managers.
For real estate companies, the growing domestic funding pool is positive, but access to capital is likely to depend increasingly on the quality of the project, developer track record and repayment visibility.
What It Means for Housing and Property Projects
Continued private credit availability can help developers maintain construction activity, refinance existing obligations and acquire land for future projects.
That can support the supply of new housing and commercial properties. But if lenders become significantly more conservative, weaker or highly leveraged projects could face greater difficulty securing funding or refinancing.
This could eventually increase the gap between financially stronger developers and smaller companies with limited access to capital.
Real Estate Investors Need to Watch Debt Risk
For investors and property buyers, the private credit trend is worth watching because financing conditions can influence project completion, launches and developer balance sheets.
A project backed by strong sales, realistic cash flows and manageable debt may remain attractive to lenders, while projects dependent on repeated refinancing could face greater scrutiny.
The Bigger Signal for India's Property Market
Real estate's 35% share of private credit demonstrates that lenders continue to see significant financing opportunities in India's property sector despite the associated risks.
The key takeaway for developers is that capital remains available, but it is becoming more selective. As competition among private credit funds grows, project quality, financial discipline and the ability to withstand downside scenarios are likely to become increasingly important factors in determining who gets funded and on what terms.