India’s real estate sector has experienced a remarkable fundraising surge, accumulating over ₹1 lakh crore in the past 19 to 20 months. This impressive achievement, primarily driven by debt issuances, highlights the sector’s robust growth trajectory and enhanced creditworthiness, fuelled by a vibrant housing market and steady cash flows. According to recent data from Prime Database, real estate and civil construction companies raised approximately ₹95,975 crore through debt in 2023 and 2024, with ₹61,600 crore secured last year and ₹34,375 crore so far this year. In contrast, equity fundraising has seen a modest increase, rising from just ₹124 crore in 2023 to ₹8,772 crore in 2024, predominantly due to initial public offerings (IPOs).
The fundraising landscape remains dynamic, with an additional ₹28,350 crore in issuances anticipated. This includes ₹16,635 crore in debt, ₹9,695 crore through Qualified Institutional Placements (QIPs), and the balance via IPOs. A spokesperson from Equirus Investment Banking noted that developers are benefiting from improved cash flow predictability, as payments are often received on a milestone basis. This financial stability allows real estate firms to secure debt financing at competitive rates, particularly for those with strong credit ratings. Although the rise in equity issuances in 2024 is noteworthy, debt financing continues to be favoured due to its cost-effectiveness. Investors typically seek higher returns, making debt financing, available at rates between 10% to 12%, a more attractive option.
The capital raised is being strategically allocated towards construction financing, land acquisition, and sustaining new project launches. In the first half of 2024 alone, there were 54 land deals encompassing over 1,000 acres, while 2023 saw nearly 100 deals covering over 2,700 acres, according to Anarock, a leading real estate consultancy. Notably, larger, listed real estate players are increasingly acquiring projects or land from smaller, unlisted entities, often opting to develop these assets independently or through joint ventures. The emergence of real estate platforms backed by strategic investors has further bolstered fundraising efforts through QIPs and preferential issues.