Why Private Credit is Gaining Popularity in Real Estate Financing
Private credit is witnessing unprecedented growth in India, and its impact on real estate financing is profound. Traditionally dominated by banks and non-banking financial companies (NBFCs), the Indian real estate sector is now increasingly turning to private credit as a viable alternative for funding. This shift is driven by regulatory changes, market dynamics, and the inherent benefits of private credit as an asset class. The Shift in Financing Dynamics Historically, banks and NBFCs were the primary sources of funding for real estate developers in India. However, the landscape began to shift post-2018, during the IL&FS crisis. The Reserve Bank of India (RBI) imposed stricter regulations on lending for land acquisition and project approvals, significantly reducing the flow of traditional credit. This created a funding vacuum, which private credit has effectively begun to fill. According to a 2024 report by Knight Frank, private credit in India’s real estate sector has grown by ove...