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• ANAROCK Capital has estimated that India’s real estate sector will require nearly INR 50 lakh crore in capital over the next decade to support expansion into a USD 1 trillion market by 2030.
• The report highlighted financing constraints including restrictions on bank funding for land acquisition, rising borrowing costs and limited institutional access for smaller developers.
• Alternative Investment Funds (AIFs), REITs, NBFCs and private capital are increasingly emerging as major funding sources across land acquisition, construction finance and last-mile funding.
• Industry stakeholders stated that institutional capital remains concentrated among large developers and key metropolitan markets, limiting access for Tier-II and Tier-III projects.
• The report noted that broader funding access across affordable housing and emerging cities will be critical for balanced long-term sectoral growth.
ANAROCK Capital has stated that India’s real estate sector could require nearly INR 50 lakh crore in capital over the next ten years to support its projected expansion into a USD 1 trillion industry by 2030, with the market potentially reaching USD 5–7 trillion by 2047. Advertisement
In its latest report examining the country’s real estate financing landscape, the consultancy highlighted several structural challenges affecting funding access across the sector, including regulatory restrictions, high borrowing costs and limited institutional participation beyond larger developers and metropolitan markets.
According to the report, restrictions imposed by the Reserve Bank of India on bank funding for land acquisition and project approvals continue to push developers towards alternative financing channels such as Non-Banking Financial Companies (NBFCs), Alternative Investment Funds (AIFs) and private equity investors. The report added that stricter debt servicing norms, higher equity contribution requirements and refinancing constraints have further complicated project financing.
The consultancy also noted that legal disputes, title-related issues and delays in regulatory approvals continue to create funding bottlenecks and increase project costs. Higher interest rates charged by private lenders and NBFCs have additionally raised financing expenses, particularly affecting smaller and mid-sized developers with limited institutional access.
Industry participants stated that the sector is currently witnessing a structural transition towards more diversified funding models. Umesh Gowda H A stated that India’s real estate market is entering a long-term institutional capital expansion phase, with AIFs, REITs, NBFCs and private investors increasingly complementing traditional bank lending across land acquisition, construction finance and project completion stages.
According to the report, AIFs have emerged as a significant funding source following the liquidity stress faced by NBFCs after 2018. As of December 2025, real estate accounted for nearly 12 per cent of total AIF investments, estimated at around USD 8 billion, based on data from Securities and Exchange Board of India.
Ankur Jalan stated that AIFs are increasingly participating across multiple stages of the real estate financing cycle, including land aggregation, post-approval financing, construction funding and last-mile capital support. He added that this has improved execution visibility and liquidity confidence within the market.
Despite increasing institutional participation, the report observed that capital allocation remains concentrated among a limited number of large developers operating across major metropolitan regions. Developers in Tier-II and Tier-III markets continue to face restricted access to formal institutional funding channels and remain dependent on internal accruals or informal financing structures.
Lalit Parihar stated that expanding institutional funding access into emerging cities and end-user driven housing markets will become increasingly important as residential demand deepens beyond established metropolitan locations. He added that affordable and mid-income housing projects in smaller cities require improved liquidity support to maintain balanced sectoral growth.
The report noted that India’s real estate financing ecosystem has become more regulated and institutionalised compared to a decade ago. However, it stated that the sector’s next phase of growth would depend not only on the volume of capital entering the market, but also on whether funding reaches smaller developers, affordable housing segments and emerging urban centres outside the country’s largest cities.
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