Real estate tops private credit deployment but has highest default risk

Real estate accounted for 35% of India's private credit deal value in the first half of 2026, the largest sector allocation, even as an EY survey identified it as having the highest perceived default risk among investors. Business Today reports that the sector's dominance in deployment sits alongside a clear risk concern, while the Economic Times notes the contrast between continued demand and investor caution.

India's overall private credit market remained resilient, with US$3.5 billion deployed across more than 100 transactions in H1 2026, broadly stable from US$3.4 billion in H2 2025. Mid-sized deals between US$10 million and US$60 million gained ground, accounting for 61% of deal value, up from 51% in the previous half. Domestic funds drove the market, contributing 74% of deal value and 79% of deal volume.

Nearly 73% of investors expect activity to remain strong over the next one to two years, driven by stress-related situations, capital expenditure and M&A financing. The EY report expects the market to stay resilient over the next two to three years, with infrastructure and asset-heavy sectors potentially emerging as key areas alongside real estate.