Climate-first Private Credit Can Bridge India’s Real Estate Funding Gap: Sundaram Alternates

India’s real estate sector, projected to reach $1 trillion by 2030 and contribute 13% to the GDP, cannot achieve this growth without a climate-first approach to financing, according to a new white paper by Sundaram Alternates (SA) titled “Bridging the Gap: The Essential Role of Climate-First, ESG-Integrated Private Credit in India’s Real Estate Growth.”

Closing a Critical Funding Gap
India’s property market is experiencing unprecedented momentum, with 89 million sq. ft. of office leasing in 2024 and a 35% YoY surge in FDI inflows in Q1 2025. Yet, mid-stage construction financing remains underserved as banks and NBFCs pull back. 

The white paper identifies this “sweet spot” for climate-first, ESG-integrated private credit, which can both bridge the funding gap and deliver 15–20% risk-adjusted returns for investors.

Climate & ESG: From Concept to Measurable Outcomes
The paper firmly establishes that ESG is no longer optional, especially since the real estate sector accounts for nearly 40% of global energy-related CO₂ emissions. With nearly 70% of the infrastructure needed for 2070 yet to be built, the paper argues that embedding ESG from the outset is both an opportunity and a necessity. It positions ESG-integrated private credit as a unique solution that can deliver financial returns while creating measurable environmental and social impact.

The paper demonstrates how a climate-first approach, enabled by ESG discipline, has already delivered measurable outcomes through past initiatives:
27,000 MWh of annual energy savings
13.4 million m³ of water savings annually
12,811 tons of operational CO₂ emissions reduced per year
>13 million sq. ft. of green-certified building space developed
Positive impact on 1.3 million+ lives

Global Context, India’s Opportunity
Globally, ESG-integrated private credit has become mainstream, with the US SEC, Europe’s SFDR, Japan’s GPIF, and Singapore’s Green Finance Action Plan driving over $1 trillion in sustainable capital flows. The paper argues that with India’s upcoming green taxonomy and SEBI’s BRSR norms, the country is poised to leapfrog global peers and become a leader in climate-first financing.

Karthik Athreya, Managing Director at Sundaram Alternates, 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 $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.”

The Way Forward 
A once-in-a-generation opportunity is presented by India's $1 trillion real estate growth tale. However, growth is no longer feasible without sustainability. A private finance framework that prioritises climate change and integrates ESG guarantees that funding flows provide resilience and accountability in addition to rewards. 

Risk Management at the Core
The white paper stresses that climate-first investing must be anchored in disciplined risk management. Proven practices such as amortising payout structures, multiple security packages, and strong promoter alignment ensure investor capital remains protected even as funds push for measurable climate impact.