What is the role of debt financing in Indian real estate?

Debt financing stands as a cornerstone for the Indian real estate sector, enabling developers to acquire land, construct projects, and manage cash flow until sales proceeds or rental income materialize. Over the past six years, INR 9.63 lakh crore was sanctioned to real estate, averaging INR 1.61 lakh crore annually, reflecting the sector’s capital intensity.

Primary Avenues for Debt Financing:

  • Banks: Both public and private sector banks provide project loans, term loans, and working capital.
  • In 2023, private banks accounted for 70% of the total real estate debt sanctioned, indicating their growing appetite for structured deals.

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