Climate Credit for Realty: 15-20% Return

New Delhi, Nov 12 (PTI) India's real estate sector, which is projected to reach USD 1 trillion by 2030 and contribute 13 per cent to GDP, cannot achieve sustainable growth without a climate-first approach to financing, a report said.

The white paper titled 'Bridging the Gap: The Essential Role of Climate-First, ESG-Integrated Private Credit in India's Real Estate Growth' identified this 'sweet spot' for climate-first, ESG-integrated private credit, which can both bridge the funding gap and deliver 15-20 per cent risk-adjusted returns for investors.

Private credit is uniquely positioned to address both this funding gap and the urgent need for sustainability, Sundaram Alternates said in a report on Wednesday.

A climate-first, ESG-integrated private credit framework can deliver attractive 15-20 per cent risk-adjusted returns, while ensuring India's real estate growth aligns with climate imperatives, it said.

It further said that global capital increasingly demands climate and ESG-aligned integration, and by prioritising climate-first private credit, India can attract international flows while strengthening domestic resilience.

India's property market is experiencing unprecedented momentum, with 89 million square feet of office leasing in 2024 and a 35 per cent surge in FDI inflows in Q1 2025, it said, adding that yet, mid-stage construction financing remains underserved as banks and NBFCs pull back.

Commenting on the findings, Sundaram Alternates managing director Karthik Athreya, said India's real estate story is no longer just about scale - it's about sustainability.

"Our white paper demonstrates that climate-first private credit is the missing link between investor capital and India's USD 1 trillion real estate growth. This is not theory; it is a practical roadmap that shows how disciplined risk management and measurable climate outcomes can go hand-in-hand. Sundaram Alternates is proud to lead this industry-first conversation," he said.

Sundaram Alternates Assets Ltd, part of the Sundaram Finance Group, manages approximately Rs 7,000 crore across private credit, corporate credit, and thematic equity funds.