India’s real estate sector to need ₹50 lakh crore capital over next decade: Report

India’s real estate sector will require nearly ₹50 lakh crore in capital over the next 10 years to support its expansion into a $1 trillion market by 2030 and potentially a $5-7 trillion industry by 2047, according to a report by Anarock Capital. 

The report highlighted multiple financing challenges facing the sector, including regulatory hurdles, limited institutional funding access and high borrowing costs, particularly for smaller developers. 

According to the report, restrictions imposed by the Reserve Bank of India (RBI) on banks funding land acquisitions and approvals have forced developers to increasingly depend on non-banking financial companies (NBFCs), alternative investment funds (AIFs), and private equity (PE) investors for project financing. 

Debt Service Coverage Ratio

It added that banks continue to demand high equity contributions and strict compliance with Debt Service Coverage Ratio (DSCR) norms while NBFCs and private lenders charge higher interest rates, increasing overall project costs. 

The report also pointed to legal disputes, title-related issues, and delays in regulatory clearances as key factors causing funding bottlenecks. High interest rates, tighter RBI norms on refinancing and debt restructuring, and the burden of non-performing assets (NPAs) are further limiting borrowing capacity for developers. 

Umesh Gowda H.A. said the Indian real estate sector is entering a long-term capital expansion cycle, with institutional participation expected to rise significantly over the coming decade. 

He said funding sources are increasingly diversifying, with AIFs, REITs, NBFCs, and private capital bridging financing gaps across land acquisition, construction finance and last-mile funding while the growth in housing finance continues to reflect strong end-user demand. 

The report noted that AIFs have emerged as a major funding source for developers, particularly after the 2018 NBFC crisis. Citing data from Securities and Exchange Board of India, it said real estate accounted for around 12% of total AIF investments, or nearly $8 billion, as of December 2025. 

Ankur Jalan said the Indian real estate sector has witnessed a structural transformation in its funding ecosystem, with AIFs becoming a critical source of growth capital. 

He said AIFs are increasingly financing not only land aggregation and acquisition stages, where traditional lenders often remain absent, but also post-approval construction and last-mile funding, helping improve liquidity visibility, project execution and market confidence. 

The report, however, noted that Tier II and Tier III developers continue to face limited access to institutional funding, with capital largely concentrated among major developers in the top five cities. 

Lalit Parihar said expanding diversified funding channels into emerging markets will be critical as housing demand rises beyond established metropolitan centres. He added that affordable and mid-income housing projects in Tier II and Tier III cities would require greater institutional participation to ensure balanced growth across the sector.