Private credit surge fills $250bn Gulf financing void as banks hit lending limits

NISUS FINANCE POSITIONS UAE AS PRIVATE CREDIT HUB AS GCC FINANCING GAP WIDENS TO $250 BILLION

A structural financing shortfall exceeding AED 918 billion ($250 billion) across the Gulf Cooperation Council is reshaping how capital reaches businesses in the region, opening the door for non-bank lenders as traditional banking capacity approaches its limits. The gap is already accelerating private credit’s expansion, with the GCC and Egypt market projected to grow between 15 and 30 percent annually through the end of the decade, reaching AED 40.4 billion to AED 73.5 billion ($11 billion to $20 billion) by the end of the decade.

Nisus Finance, a publicly listed real estate investment firm headquartered in India and now operating a DIFC-regulated platform in the UAE, frames private credit as complementary to traditional banking rather than a rival. The asset class addresses the structural gap between what deposit-taking institutions can prudently lend and what businesses actually require to grow, develop or complete transactions. Prudential requirements naturally constrain the types of financing banks can provide, creating a durable and expanding role for alternative lenders.

The financing need extends well beyond real estate, though property remains a significant deployment area. Technology, SME lending, education, healthcare, logistics and supply chain sectors are all generating demand for flexible capital structures. Developers are increasingly turning to private credit not primarily for pricing advantages but for three critical factors: certainty of execution, flexibility across the capital structure, and the ability to underwrite the underlying business and asset rather than relying on the borrower’s balance sheet alone.

Dubai’s property sector illustrates the capital intensity driving this shift. Real estate investment exceeded AED 680 billion ($185.2 billion) across more than 258,000 deals in 2025, a figure that signals both the scale of capital flowing into the sector and the corresponding demand for diversified financing solutions. Developers require capital for acquisitions, bridge financing, project completion and recapitalisation, needs that increasingly fall outside traditional bank lending parameters.

By contrast, the UAE’s regulatory infrastructure positions it well for this growth phase. The Dubai International Financial Centre and Abu Dhabi Global Market provide established frameworks, fund structures and enforcement mechanisms that allow international institutional capital to evaluate and underwrite opportunities with confidence. Abu Dhabi’s emergence as a regional private credit centre is reinforcing the sector’s foundations; Mubadala’s private credit portfolio had reached approximately AED 73.5 billion ($20 billion) by early 2025.

Despite this momentum, private credit remains nascent across the region. As recently as 2021, it represented only around 3 percent of total real estate debt across the UAE and Saudi Arabia, indicating substantial headroom for growth. India offers a useful leading indicator for the Gulf’s trajectory. Private credit deployment there reached an estimated AED 45.5 billion ($12.4 billion) in calendar year 2025, with real estate accounting for close to 40 percent of transactions. India’s experience demonstrates how private credit can develop alongside conventional bank financing by addressing requirements that traditional lenders cannot structurally serve.

Amit Jhunjhunwala, Chief Investment Officer for the UAE at Nisus Finance, is clear that this expansion reflects a capital structure gap rather than cyclical demand. “Private credit is not replacing banks. It is completing a capital structure that has traditionally had a gap between what a deposit-taking institution can prudently lend against and what a business or asset actually requires to grow, develop or complete a transaction,” he said.

Over the next three to five years, private credit activity is expected to broaden significantly. In real estate, opportunities will likely center on residential completion and last-mile financing, acquisition and bridge financing, and recapitalisation. Capital-intensive sectors including data centres and digital infrastructure, logistics and warehousing, healthcare infrastructure and hospitality could also become increasingly important areas for structured lending as investment and expansion continue.

The growing investment relationship between India and the GCC adds another dimension. Jhunjhunwala noted that Gulf capital has duration, while Indian businesses and assets require duration capital, positioning private credit as an efficient instrument connecting the two markets.

Discipline will determine whether the asset class delivers on its promise. Nisus Finance’s India operations have delivered approximately 20 percent average Internal Rate of Return across realised exits, with no loss of capital across more than 15 investments, a track record the firm is carrying into its GCC approach.

Jhunjhunwala’s assessment of the region’s readiness is direct: “The opportunity extends well beyond any single sector as businesses across the region look for more flexible sources of capital. The next phase will be determined by the quality of underwriting and the discipline with which that capital is deployed.” Whether the region’s institutional investors and regulators can sustain that discipline as deal volumes scale remains the central question for the asset class.