India has emerged as one of the most powerful private credit markets in the Asia-Pacific region, ranking 2nd in APAC and contributing 36% of all private credit fundraising between 2020 and 2024, according to Knight Frank’s latest Horizon Report: The Rise of Real Estate Credit in Asia-Pacific – Bridging the Gap.
The report highlights that India’s private credit assets under management (AUM) have seen an exponential jump from USD 0.7 billion in 2010 to USD 17.8 billion in 2023, marking rapid institutionalisation and increasing investor confidence. Driven by regulatory reforms and growing demand for alternative financing, India is projected to contribute 20–25% of the expected USD 90–110 billion regional private credit growth by 2028.
Private Credit Surges as Developers Shift to Non-Bank Capital
Knight Frank notes that India’s private credit boom has been fuelled by developers seeking structured funding solutions amid tighter banking norms and evolving regulatory landscapes. Institutional investors — including family offices and PE firms — are actively deploying capital into residential development funding, refinancing, and special situation financing.
“India’s emergence as a leading private credit market reflects strong fundamentals, regulatory evolution, and deepening institutional participation,” said Shishir Baijal, Chairman & MD, Knight Frank India.
He added that private credit now provides developers with flexibility and speed, especially amid rising demand for urban housing and elevated interest rates globally.
Private Credit Expands Beyond Traditional Real Estate Loans
The segment is evolving to address market inefficiencies and liquidity challenges:
- Structured and last-mile financing helping revive stalled projects
- Special situation funds tackling developer distress cases
- Broader investor participation improving stability
Analysts say this diversification is creating resilience and attracting wider institutional interest.
APAC Private Credit Raised USD 11.2 Billion Between 2020–2024
Across Asia-Pacific, real estate private credit fundraising totalled USD 11.2 billion, marking a 40% rise, demonstrating the region’s growing relevance in global alternative lending.
Regional Distribution of Fundraising
- Australia – 40% (largest contributor)
- India – 36%
- South Korea – 11%
- Japan – 5%
- Remaining APAC markets – 8%
Australia currently holds USD 50 billion in private credit AUM, equivalent to 16% of total CRE lending.
“Private credit is becoming a preferred financing route for developers seeking speed and flexible structures,” said Simon Mathews, Director, Capital Advisory, Knight Frank.
Key Investment Themes Emerging in APAC Private Credit
- Development financing where banks are retreating due to Basel III constraints
- Bridge & refinancing amid valuation corrections in Australia & Hong Kong SAR
- Value-add & ESG upgrades including retrofits and office conversions
- New economy assets such as data centres, logistics, and build-to-rent housing
Family Offices Driving Growth Momentum
Asia-Pacific continues to attract increasing allocations from UHNWIs and family offices:
- Global family office wealth stands at USD 3.1 trillion
- 37% plan to increase indirect real estate exposure
- Private credit allocations—highest demand among asset classes
Private credit strategies are now targeting 3% to 6.5% returns above benchmark rates, with special situations delivering double-digit returns.
Outlook: Attractive Risk-Adjusted Returns Despite Challenges
While risks remain around liquidity and regulation, Knight Frank expects private credit to expand further due to high-return potential and institutional maturity.
“This is the strongest environment for private credit in more than a decade,” Simon added.
Also Read: India Leads APAC Real Estate Investments with 88% Growth in H2 2024
