India now APAC's no. 2 in real estate private credit; poised to capture 25% of regional growth by 2028: Knight Frank

India has emerged as one of the most dynamic real estate private credit markets in Asia-Pacific, claiming 2nd position and accounting for 36% of regional fundraising between 2020 and 2024, according to Knight Frank’s 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 grown exponentially from $0.7 bn in 2010 to $17.8 bn in 2023, driven by the market’s rapid institutionalisation and rising investor confidence. The report says that, supported by regulatory reforms, diversified funding structures, and sustained demand for flexible financing, India is expected to contribute 20–25% of the region’s projected $90-110 bn growth in private credit by 2028.

India’s private credit expansion has been driven by developers’ increased reliance on non-bank capital amid evolving regulatory frameworks and a tighter banking environment, says the report. Institutional investors, including family offices and global private equity firms, have been quick to capitalise on the segment’s attractive risk-adjusted returns, particularly across residential development, refinancing, and special situation financing.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “India’s emergence as a leading private credit market within Asia-Pacific reflects the country’s strong economic fundamentals, regulatory evolution, and deepening institutional participation. Developers are increasingly turning to structured and alternative financing to bridge capital gaps and meet rising urban housing demand. What makes India particularly attractive is the balance between growth and governance, where capital providers see both opportunity and resilience.” 

Asia-Pacific private credit on a growth trajectory

Asia-Pacific real estate private credit raised $11.2 billion between 2020 and 2024, marking a 40% increase that signals the region's growing prominence in alternative lending. Over the next three years, Knight Frank projects $90 to $110 billion in private credit growth across Australia, Hong Kong SAR, India, and South Korea. Australia is expected to drive almost 50% of this expansion, with India contributing 20-25%, based on anticipated real estate debt growth and private credit's expanding market share through 2028.

Despite this under-representation, the region shows clear momentum. Average fund sizes in Asia-Pacific have consistently exceeded $100 million since 2022, reflecting stronger capital commitments and rising real estate project funding requirements.

Australia leads regional activity, capturing 40% of the $11.2 billion raised between 2020 and 2024. Private credit now accounts for an estimated $50 billion or 16% of total commercial real estate lending in the country, as conservative bank policies push more borrowers toward specialist private credit funds. South Korea accounts for 11% of the regional total, while Japan represents 5%, with the remaining 8% spread across other markets.

Simon Mathews, director, capital advisory, global capital markets, Knight Frank, says, "Private credit is becoming an increasingly prevalent financing option for developers and investors across Asia-Pacific, offering speed, flexibility, and solutions, in place of or complementing traditional lending sources."

Family office interest accelerates growth

The report highlights increasing participation from ultra-high-net-worth individuals and family offices, with global family office assets estimated at $3.1 trillion. Knight Frank's inaugural Family Office survey found 37% of respondents intend to increase indirect real estate exposure over the next 18 months, while BlackRock's 2025 Family Office survey shows nearly one-third want to increase private credit allocations -- the highest of any asset class.

Private credit providers target returns of 3 to 6.5% above benchmark rates in core strategies, with higher-risk approaches potentially delivering double-digit returns. The higher interest rate environment has strengthened the investment case for private credit as an asset class.