Today Affordable Housing, a key growth driver of Indian real estate, is at the crossroads. Chronically under-funded segment with over 4.5 lakh stalled affordable mid-range homes in more than 1500 stuck projects, requiring 55k crore funding support.

According to a recent report by Anarock, housing finance now valued at over INR 38 lakh crore is projected to reach INR 77 Lakh crore by 2029-30 at 15% CAGR with home loans by far the largest RE financing component. Banks dominate commercial real estate financing, accounting for 56% of overall  commercial real estate lending at INR 5.2 lakh crore while NBFCs & HFCs contribute 22%.As much as 80% of CRE lending is  concentrated in top 3 cities of MMR, NCR & Bengaluru.

Tracking India’s real estate finance transformation story, the report projects that India’s real estate sector will require nearly INR 50 lakh crore of capital over the next 10 years to support its growth into a USD 1 trillion market by 2030, and potentially USD 5-7 trillion by 2047. From a fragmented, NBFC-dominated ecosystem into a more institutional, transparent, regulated, and diversified capital market, the transformation is driven by banks, Alternative Investment Funds (AIFs), Real Estate Investment Trusts (REITs), private credit, and government-backed initiatives.

 India’s real estate sector, according to Shobhit Agarwal, CEO, Anarock Capital, no longer faces a shortage of capital. The real challenge is whether this capital can reach beyond the top developers and major metros to fund affordable housing, smaller developers, and emerging Tier II & Tier III cities.

Today, despite increasing institutional participation, capital remains concentrated with established developers in the top metropolitan markets. This leaves a critical gap in affordable housing, where India is estimated to require 25 million additional units by 2030. Says Vishal Srivatava, Head, Corporate Finance, Managing Director, Anarock Capital, “Despite strong demand, affordable housing remains underfunded and requires dedicated capital structures. There is an urban housing shortage of roughly 10 million units, and at least 25 million affordable homes are needed by 2030. Yet affordable housing supply has sharply declined – homes priced below INR 40 lakh accounted for just 10% of new launches in Q1 2026, down from 26% in 2021. At the same time, premium housing has surged, with homes priced above INR 1.5 crore making up 53% of new launches.”

This, the report, finds, is indicative of a financing system increasingly concentrated around higher-margin projects. Affordable housing – despite offering the highest social return – remains off the radar of formal capital, while institutional lending continues to favour the top cities and largest developers.

“India’s affordable housing problem is no longer a demand issue, but a structural capital allocation and financing architecture challenge,” says Srivastava. “The report emphasizes that India’s next phase of real estate growth will depend not on raising more capital, but on broadening access to capital.”

The state of affordable housing can be gauged from the stark statistics. In 2024, India had more than 4.5 lakh stalled affordable and mid-income homes across 1,500+ projects, requiring INR 55,000 Cr in funding support. The government-backed SWAMIH Fund, launched in 2019 with an initial corpus that expanded to INR 15,530 crore, has already enabled completion of 58,596 homes, with over 1 lakh units expected in total. In Budget 2025–26, SWAMIH Fund 2.0 added another INR 15,000 Cr blended-finance vehicle targeting completion of an additional 1 lakh stalled units, according to Srivastava. On the retail finance side, PMAY-Urban 2.0 aims to support 1 crore additional urban homes, while Affordable Housing Finance Companies are projected to grow assets under management by 20–21% in FY26–27, outpacing the broader mortgage sector. 

The report further notes that a series of structural reforms including RERA, GST, the Insolvency and Bankruptcy Code (IBC), REIT regulations and tighter RBI norms have fundamentally changed how real estate is financed in India. There were 38 lakh crore in outstanding individual housing loans as of February 2026 and more than INR 5.2 lakh crore in commercial real estate lending by banks. Six listed REITs have a combined market capitalization exceeding INR 2 lakh crore. Real estate accounts for the largest sectoral allocation within India’s AIF industry.

The report also highlights the untapped REIT opportunity in the country. Currently, only 198 Mn sf (~37%) of India’s 520 Mn sf REIT-worthy office stock is listed. The country’s REIT penetration remains quite low as compared to the mature markets. REIT market cap equals only 0.4% of stock market cap, representing just 20% of listed real estate market value, significantly below mature markets.

While India’s domestic REIT market continues to mature, CapitaLand India Trust (CLINT) represents an important example of offshore institutional capital participating in Indian real estate. Listed on the Singapore Exchange in 2007, CLINT became Asia’s first India-focused property trust, predating the launch of India’s own REIT ecosystem by over a decade. “CLINT is strategically positioned across 15 diverse assets – commercial office, industrial, logistics and data centre, making it one of the earliest institutional platforms to capture India’s shift beyond traditional office real estate. CLINT demonstrates three structural shifts occurring within India’s RE capital markets – global capital confidence, multi-asset diversification, and a practical example for future capital recycling, according to Shobhit Agarwal.

The report identifies data centres, logistics, industrial real estate, and GCC-led office developments as the next major recipients of long-term capital. Some of the report’s projections highlight that India’s data centre capacity is expected to exceed 8 GW by 2030, warehousing stock has grown to over 605 million sq. ft. and GCCs and technology occupiers could drive demand for 1.2 billion sq. ft. of office space by 2030.These sectors are attracting a different kind of capital – long-term, yield-focused, and globally benchmarked. This is creating a deeper and more resilient financing ecosystem.

The report concludes that despite short-term friction from geopolitical tensions and global market volatility, India’s strong domestic demand, infrastructure investments, and regulatory reforms remain a robust foundation for real estate growth. As global supply chains rewire in India’s favour and the AI economy takes root, the country is uniquely positioned to convert external disruption into domestic opportunity. Taking stock of the commercial real estate financing, the RBI’s evolving project finance framework, deepening capital markets, and the growing role of private credit are collectively strengthening the lending ecosystem. Developers with strong balance sheets, low leverage, and completed inventory are well placed to weather the volatility and well-positioned to access capital on favourable terms.