Developers · Capital · The Propah POV
Raising project capital: what does an investor ask first?
Not about your project. About how they get their money back — from what cash flow, in what order, secured against what, and what happens if sales run 40% slower than your model. Private credit into Indian real estate targets roughly 12–21% IRR, which tells you how the conversation is framed: they are pricing your downside, not admiring your upside.
Where the money is coming from now
Bank construction finance is the cheapest capital and the hardest to get, and it has largely withdrawn from mid-stage residential. What has filled the gap is private credit — and the scale of that shift is the single most useful thing for a developer to understand before walking into a meeting.
| The private credit market | |
|---|---|
| Category II AIFs in India | USD 117 billion |
| Registered AIFs | 143 in March 2015 → 1,532 in March 2025 |
| AIF investment growth | ~52% a year over the decade |
| Target returns, real estate | 12–21% IRR |
| Sector split | Residential largest; office 17%, warehousing 5%, retail 2% |
| Mid-stage construction finance shortfall | est. USD 15–20 billion (late 2025) |
The instruments are flexible — mezzanine debt, bridge loans, preferred equity — and that flexibility is the point. A fund that can sit anywhere in the stack will structure itself into whatever position your existing charges leave available, and price accordingly.
The seven questions, in the order they are actually asked
1. What is the security, and where do I sit?
Charge on the land, charge on receivables, an escrow over collections, a debt service reserve, a promoter guarantee. Then the question behind the question: who is ahead of me? An existing lender who will not subordinate is a hard stop, and it is better discovered by you than by them.
2. What is your sales velocity assumption, and what is it based on?
This is where most declines happen, and it is worth being blunt about why. Bengaluru had 79,200 unsold units and roughly fifteen months of overhang in Q2 2026, with launches running 42% ahead of absorption. A model assuming absorption the micro-market has not produced in two years will not survive first review, and presenting one damages your credibility for the rest of the process.
Bring the actual absorption record of your competitive set, not a citywide average. The corridor is the unit of analysis, not the city.
They are not evaluating whether your project works. They are evaluating whether it still repays them when it does not.
3. What is the approval status, precisely?
RERA registration and what it discloses. Sanctioned plan, commencement certificate, khata and conversion. Anything pending, with a realistic date and the consequence of it slipping. A capital provider prices approval risk at their own cost of capital compounded over the delay, so an honest six-month estimate costs you less than an optimistic two-month one that turns into eight.
4. What does your completion record look like?
Not your brochure — your RERA record, which shows revised completion dates across your whole portfolio and which any serious investor will pull before the second meeting. A promoter who raises their own history before it is raised for them is in a materially stronger position than one who is caught by it.
5. What money is already in, and on what terms?
Every existing facility, its charge, its covenants, its maturity, and whether the holder will subordinate. Customer advances count here too — they are the largest source of capital in most Indian residential projects and they carry RERA obligations on how they may be used.
6. What does the cash flow waterfall look like?
Collections in, and then in what order money leaves: construction, statutory dues, interest, principal, promoter. Write it down before the meeting. A developer who cannot describe their own waterfall is telling an investor that the money is fungible in practice, which is the thing the investor most fears.
7. What is the exit, and by when?
Repayment from sales collections, refinancing on completion, or a sale of the asset. Give the base case and the case where sales run 40% slower, and show that the second one still repays — late, but fully. That single slide does more for a fundraise than any amount of renderings.
SWAMIH: what it is for, and what it is not
The government’s Special Window for Affordable and Mid-Income Housing has a specific purpose, and developers regularly approach it for the wrong one.
- SWAMIH I, launched November 2019 with SBI Ventures as investment manager, had committed to 148 projects and delivered 63,200 homes of a 1,01,443-home portfolio, with ₹15,530 crore secured, as at 31 January 2026.
- SWAMIH II was allocated ₹15,000 crore in the Union Budget 2026–27, targeting roughly one lakh units. As at March 2026 it was described as in the process of formal launch; verify its current status before planning around it.
- Eligibility is narrow. Projects must be RERA-registered, stressed or brownfield, and in the affordable and mid-income segments. It explicitly reaches developers with customer complaints and NPA accounts — that is the design, not an exception.
It is last-mile funding for stalled affordable and mid-income housing. It is not growth capital for a healthy launch, and treating it as such wastes months.
What to have ready before the first meeting
- A cash flow model with a downside case that still repays. Lead with the downside.
- The absorption record of your named competitive set, with dates and sources — not a market report.
- A one-page capital structure: every existing facility, charge, covenant and maturity.
- Your own RERA record, with revised completion dates explained before they are discovered.
- The approval schedule, with honest dates and the cost of each slipping.
- The waterfall, written down.
- A clear ask. How much, for what, over what tenor, and what it unlocks. A developer who has not sized their own requirement invites the investor to size it for them.
What this does not cover
- The 12–21% IRR range is a published market observation for Indian real estate private credit, not a rate you will be offered. Pricing depends on position in the stack, security, tenor and sponsor.
- Typical ticket sizes, security norms and documentation standards are not published in any source we could verify, and are not given here.
- AIF market figures cover roughly 2015–2025 as published in late 2025.
- SWAMIH II status is as reported in March 2026 and may have changed. Eligibility criteria summarised here are as published and are not a substitute for the scheme documents.
- This is general commentary, not financial, investment or fundraising advice.
What do investors ask developers first when raising project capital?
How they get repaid, before anything about the project itself. Specifically: what the security is and who ranks ahead of them, what sales velocity the model assumes and what evidence supports it, the precise approval status, the promoter's completion record, what capital is already in and on what terms, the cash flow waterfall, and the exit with a downside case. Private credit into Indian real estate targets roughly 12–21% IRR, which frames the conversation around downside protection rather than upside.
Why do developers get declined for project funding?
Most often on the sales velocity assumption. A model assuming absorption the micro-market has not produced in two years does not survive first review, and presenting one damages credibility for everything that follows. Bengaluru had 79,200 unsold units and roughly fifteen months of overhang in Q2 2026, with launches running 42% ahead of absorption — an investor knows this. Bring the actual absorption record of your named competitive set rather than a citywide average.
What returns does private credit target in Indian real estate?
Published market observation puts the range at roughly 12–21% IRR, with structures including mezzanine debt, bridge loans and preferred equity. That is a sector range rather than a quote — actual pricing depends on where the capital sits in the stack, what security it holds, the tenor and the sponsor's record. Category II AIFs in India stood at around USD 117 billion, with registered AIFs growing from 143 in March 2015 to 1,532 in March 2025.
What is the SWAMIH fund and who qualifies?
A government special window providing last-mile debt to stalled housing. Projects must be RERA-registered, stressed or brownfield, and in the affordable and mid-income segments — it explicitly reaches developers with customer complaints and NPA accounts, which is the design rather than an exception. SWAMIH I had committed to 148 projects and delivered 63,200 homes of a 1,01,443-home portfolio with ₹15,530 crore secured as at 31 January 2026. It is not growth capital for a healthy launch.
How big is SWAMIH Fund II?
₹15,000 crore, allocated in the Union Budget 2026–27 and targeting roughly one lakh housing units in stalled projects. As at March 2026 it was described by the Finance Minister as in the process of formal launch, so its operational status should be verified before any project plan depends on it. Eligibility follows the same narrow shape as SWAMIH I: RERA-registered, stressed or brownfield, affordable and mid-income segments.
Why is mid-stage construction finance so hard to raise in India?
Because banks have largely withdrawn from it and the gap has not been fully filled. An estimated USD 15–20 billion shortfall in Indian residential mid-stage construction finance was reported in late 2025, and it is described as structural rather than cyclical — projects at roughly 40% completion onward are the specific bottleneck. Private credit has stepped in, which is why terms at that stage are priced substantially above bank construction finance and structured with tighter security.
What documents should a developer prepare before meeting an investor?
A cash flow model with a downside case that still repays, the absorption record of a named competitive set with sources, a one-page capital structure listing every existing facility with its charge, covenants and maturity, your own RERA record with revised completion dates explained rather than discovered, an approval schedule with honest dates and the cost of each slipping, the cash flow waterfall written down, and a sized ask — how much, for what, over what tenor, and what it unlocks.
Should a developer disclose a poor completion record upfront?
Yes. Any serious investor will pull your RERA record before the second meeting, and it shows revised completion dates across your whole portfolio. A promoter who raises their own history, explains what happened and what changed is in a materially stronger position than one who is caught by it — the first is managing a known risk, the second has just created a new one around disclosure. The same logic applies to existing charges and pending approvals.
Category II AIF size, AIF registration growth, the 12–21% IRR range and sector allocation from Knight Frank’s analysis of private credit in Indian real estate covering roughly 2015–2025. Mid-stage construction finance shortfall of USD 15–20 billion attributed to Sundaram Alternates, late 2025. SWAMIH I portfolio, delivery and capital figures as at 31 January 2026; SWAMIH II corpus and status as reported March 2026 and subject to change. Bengaluru Q2 2026 inventory and absorption from Anarock. Checked September 2026. Ticket sizes, security norms and documentation standards are not given because no verifiable published source was found. This is general commentary, not financial or fundraising advice.
Still deciding, or want this applied to your own situation?
Tell us where you are and we will come back to you. The first conversation is free, and we will tell you plainly if we are not the right people for it.
Next
Lead with the downside case.
The slide that shows repayment when sales run 40% behind plan does more for a raise than every rendering in the deck.
Ask an Advisor