Real estate has been the dominant sector in India's private credit market for every reporting period since 2023 — accounting for 28.3% of total deal volume in 2024, 42% in H2 2025, and 35% in H1 2026, according to EY and UTI Alternatives data. The sector's dominance is structural, not incidental: India's residential and commercial real estate market has a capital need that conventional bank lending cannot fully address, and private credit has filled that gap with growing efficiency. A Q4 2024 benchmark transaction — Elan Avenue's ₹1,200 crore privately placed NCDs at 16.5% coupon over 5 years — demonstrated that even large-ticket real estate transactions are now routinely financed through private NCD placement rather than bank consortiums.
For mid-sized Indian developers seeking ₹30-200 crore in construction finance, the private credit market in 2026 is more accessible, more competitive, and better understood than at any point in its history.
Why banks cannot solve the real estate financing problem
The structural gap in real estate financing is not about banks being unwilling to lend. It is about regulatory constraints that limit their ability to do so at the right stage.
Under Basel III capital adequacy norms, construction-stage real estate lending requires higher capital provisioning than equivalent secured corporate lending, making it less attractive from a return-on-capital perspective. Banks also face regulatory single-borrower and group exposure limits — a developer group that has already drawn significant bank facilities for completed projects may have exhausted its bank exposure capacity regardless of the new project's quality.
Most critically, banks' product structures are designed for operating businesses with steady cash flows — regular amortising repayment schedules, 3-7 year tenures, security against operating assets. Real estate construction has a fundamentally different cash flow profile: capital-intensive during construction with limited cash generation, followed by rapid cash inflow from customer collections. A repayment schedule aligned with this profile — moratorium during construction, principal repaid from customer collections — is standard in private credit and structurally incompatible with most bank term loan products.
How private credit fills the gap: what the major transactions show
The range of real estate transactions financed through private credit in 2024-2026 demonstrates how broadly the instrument has been adopted.
At the large end: Elan Avenue's privately placed ₹1,200 crore ($143 million), 16.5%, 5-year non-convertible debentures in Q4 2024, and Century Real Estate Holdings' ₹850 crore ($101 million), 10% coupon/11% redemption premium NCDs. These transactions demonstrate that private NCD placement is now a mature instrument for large-ticket real estate financing in India.
At the mid-market level: Suruchi Properties raised ₹450 crore in 4-year NCDs from two Edelweiss Alternative Funds — a transaction that represents the scale and structure most relevant to mid-sized developers. The Edelweiss transactions specifically demonstrate that domestic Category II AIFs are writing meaningful tickets for mid-market real estate credit, not just large conglomerate deals.
The pattern across all these transactions: structured NCD with defined security package, coupon in the 10-17% range depending on project quality and security, tenure aligned to the project completion and collection timeline, and repayment structured around customer collection milestones rather than arbitrary amortisation schedules.
The pricing shift that 2026 brings
Larger deals over US$120 million accounted for 18% of deal value in H1 2026, compared with 27% in H2 2025. The shift toward mid-market deal concentration means that more domestic private credit funds are competing for quality mid-market real estate mandates — and competition among lenders for quality deals compresses pricing.
A Tier 1 developer with a clean track record, RERA-compliant projects, adequate first-charge security, and 25-35% pre-sales before approaching lenders can access construction finance at 12-14% per annum in September 2026. The same developer in 2022 would have paid 16-19% for equivalent terms. The improvement reflects both the deepening of the lender market and the developer's strengthened negotiating position as more capital chases quality mandates.
What developers must have to access private credit efficiently
The developers who close private credit mandates in 45-60 days share four characteristics:
A clean project completion record — every prior project with delivery dates, RERA compliance, and customer dispute status documented and presentable. Lenders verify this independently; developers who present it proactively save 3-4 weeks of due diligence.
A complete security package with current valuations — clear title, no existing encumbrance on proposed security assets, and a current independent valuation from an approved valuer.
Pre-sales of 25-35% before approaching lenders. Pre-sales demonstrate customer demand and provide the cash flow visibility that underpins the repayment mechanism.
A specific credit information memorandum — not a project brochure — that includes a financial model with DSCR under stress scenarios, proposed security structure, and a repayment mechanism tied to defined collection milestones.
Eone Capital arranges construction finance and private credit for real estate developers across India. Active pipeline: ₹940 crore. Minimum ₹30 crore.
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