Now Reading: Real estate tops private credit deployment, default risk highest
-
01
Real estate tops private credit deployment, default risk highest
Real estate tops private credit deployment, default risk highest
India's private credit market remained resilient in the first half of 2026, with investments reaching US$3.5 billion across more than 100 transactions above US$10 million, broadly in line with US$3.4 billion recorded…
India's private credit market remained resilient in the first half of 2026, with investments reaching US$3.5 billion across more than 100 transactions above US$10 million, broadly in line with US$3.4 billion recorded in the second half of 2025, according to an EY report.
Real estate accounted for 35% of deal value, the largest sectoral share, but the June 2026 EY Private Credit Pulse Survey found that investors identified real estate as the sector with the highest perceived default risk. Roads, energy, renewables, metals and manufacturing followed. Domestic funds drove 74% of deal value and about 79% of volume.
Mid-sized deals of US$10-60 million grew to 61% of value from 51% in H2 2025. Nearly 73% of survey respondents expect strong activity over the next one to two years, driven by stress situations, capex and M&A financing. EY expects private credit to remain resilient, with real estate staying an important deployment area.
Indian Opinion Analysis
The private credit market is now filling gaps left by banks, which have tightened exposure to commercial real estate after the IL&FS crisis and the 2020 pandemic. Real estate developers, especially in tier-2 cities and stalled projects, find it hard to get conventional loans. Domestic funds, which drove nearly three-fourths of value, are stepping in at higher rates, typically 12-18% IRR. The risk is real: if defaults rise, funds may curtail lending, squeezing developers again. The next signal to watch is the Reserve Bank of India's financial stability report due in December, which will show if banks' non-performing assets in real estate are rising.
Source: businesstoday.in
This story was synthesised by AI from the source linked above.
