Real Estate Leads India’s Private Credit Deals but Emerges as Top Default-Risk Concern: EY

Real estate is at the center of India’s private credit market for two opposing reasons: it attracts the largest share of lending, yet investors see it as the sector most exposed to default risk.

The sector represented around 35% of private credit deal value in the first half of 2026, according to an EY research report. Healthcare accounted for about 13%, while food and beverages made up 12% and gained momentum compared with earlier periods. Roads, energy and renewables, metals, and manufacturing also drew attention as sectors requiring closer monitoring.

Private credit supported a range of real estate needs, including refinancing, project funding, land acquisition, working capital and construction finance. EY tracked a $176 million refinancing for Kalpataru Properties and a $98 million refinancing and working-capital transaction for Square Yards Group.

The wider credit environment offers some support to lenders. India’s banking system entered fiscal 2027 with strong capital buffers. Gross and net non-performing loan ratios stood at 1.8% and 0.4%, respectively, while bank credit grew 18% year on year to $2.31 trillion in May 2026.

EY’s survey nevertheless points to a more selective market. Respondents expressed a constructive outlook for private credit over the next one to two years, but expected investors to focus more closely on underwriting and downside protection amid rising competition and geopolitical uncertainty. Real estate could become a key test of lenders’ ability to structure transactions flexibly, select risk carefully and manage complicated refinancing and project-finance situations.