₹35 lakh Cr credit, 7 IPOs, low debt: Real estate gets a financial makeover

India’s real estate sector is no longer the cautionary tale it once was. With record-high credit flow, dramatically lower loan defaults, and a surge in real estate IPOs, the industry is undergoing a financial transformation that marks its most stable phase in over a decade.

According to Colliers India, bank credit to the real estate sector has nearly doubled over the last four years—from ₹17.8 lakh crore in FY21 to ₹35.4 lakh crore in FY25. The sector now claims a 19.4% share of total bank lending, up from 13.8% in 2016—an indicator of renewed lender faith.  Key takeways: 

• Bank credit to the real estate sector has doubled since FY 2021; loan book at over Rs 35 lakh crore at the end of FY 2025
• Leading real estate companies have shown improvements in operating and net profitability margins Debt-to-equity ratio of top 50 listed real estate companies has seen a significant drop since FY 2021, signaling steady balance sheet deleveraging
• Credit rating upgrades in real estate are significantly higher than the number of downgrades in the post-pandemic era
•  Real Estate continues to tap the equity market – 7 IPOs totaling  Rs 76 billion in 2025 so far

Trends in gross bank loan book in India (in Rs lakh crore)-

 

 

Source: RBI and Colliers India

Note: Data is for financial year (FY) | Real estate sector here includes – commercial real estate and housing (including priority sector housing) | Data is aggregate of 41 scheduled commercial banks (SCBs), which represents almost 95% of the total non-food credit deployed in India. 

Trends in NBFC loan book in India (in Rs lakh crore) -

 

 

On the NBFC front, while their real estate lending has plateaued post the 2018 crisis, the overall outstanding loan book still rose to ₹1.3 lakh crore by FY25.

NPAs (Non-Performing Assets) in the construction sector loan book dropped from 23.5% in 2021 to just 3.1% in 2025—a clear sign of enhanced repayment capacity and project viability.

What This Means for You: If you’re looking to invest in real estate, either directly or via REITs, you're entering a sector with lower credit risk and stronger financial discipline.

Listed Developers Get Leaner, More Profitable

An analysis of India’s top 50 listed developers reveals remarkable financial improvement:

66% now have operating margins above 20%, up from 55% in FY21.

62% of companies posted net profit margins above 10%, nearly triple the share from four years ago.

The proportion of firms with a debt-to-equity ratio below 0.5 has risen from 43% in FY21 to 62% in FY25.

These improvements signal a deliberate move toward deleveraging, capital efficiency, and better governance—a far cry from the debt-laden, opaque practices of the past.

Investor Insight: Financially prudent developers offer stronger equity returns and lower downside risks—ideal for both direct stock market investors and homebuyers concerned with project completion.

 

Credit Ratings Soar—Real Estate Beats Other Sectors

Perhaps the most telling metric: 23% of real estate companies saw credit upgrades in H2 FY25 versus just 1% facing downgrades. That’s a 23:1 upgrade-to-downgrade ratio, far superior to the all-sector average of 2.3.

 

What You Can Do: Use credit ratings as a filter when evaluating builders, real estate mutual funds, or REITs.

Equity Markets Open Up—And Retail Investors Are Joining In

Public markets are now a major funding channel. India saw 9 real estate IPOs in 2024, raising ₹13,800 crore—double the funds raised in 2023. In 2025 (so far), 7 real estate IPOs have raised ₹7,630 crore.

IPO trends: Heightened activity in recent years

Note: IPOs indicate listings on BSE including both Mainboard IPOs and SME IPOs. Real estate IPOs include issues by developers, housing finance companies, flex space operators, REITs, public sector undertakings of the Ministry of Housing and Urban Aff

 

From traditional residential and commercial developers to flex-space operators and hospitality firms, a wide variety of real estate players are now tapping the IPO route. The rollout of REITs and SM-REITs is further democratizing property investment for the average Indian.

Actionable Tip: Investors looking for real estate exposure can now buy units of REITs on stock exchanges, starting with as little as ₹1,000–₹5,000—no need to buy full properties. 

“Real estate players are increasingly tapping public markets to fuel their expansion and strengthen balance sheets, signaling growing investor confidence in the sector. The strong momentum seen in 2024 has carried into 2025, with seven real estate IPOs, raising more than Rs 76 billion till July. Moreover, the diverse listings across segments such as flex spaces, hospitality, office, residential, etc., and the anticipated upswing in SM REIT and REIT activity is promising for the entire real estate sector. Indian real estate continues to draw strength from long-term stability and growing investor confidence, making it less vulnerable to global uncertainties,” said Vimal Nadar, National Director and Head of Research, Colliers India.

Looking ahead, the outlook remains particularly positive for residential and commercial real estate, led by strong end-user demand, favorable demographics, rising disposable income, and relatively lower interest rates.

However, real estate developers and investors must remain cautious of potential risks, including interest rate fluctuations, urban land acquisition bottlenecks, and global economic headwinds that could moderate real estate growth.