Real Estate Sector Thrives: 35 Lakh Cr Credit, 7 IPOs, and Lower Debt
India's real estate sector is experiencing a financial renaissance with record-high credit flow, reduced loan defaults, and a surge in IPOs. This marks a significant transformation from its previous challenges.
Real EstateIpoCreditInvestmentFinancial TransformationReal Estate NewsJul 29, 2025
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—indicating renewed lender faith.
Key takeaways:
- 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.
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. 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.
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. 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.
Frequently Asked Questions
What is the current status of bank credit to the real estate sector in India?
Bank credit to the real estate sector in India has nearly doubled over the last four years, from ₹17.8 lakh crore in FY21 to ₹35.4 lakh crore in FY25.
How have NPAs in the construction sector loan book changed in recent years?
NPAs in the construction sector loan book have dropped significantly from 23.5% in 2021 to just 3.1% in 2025.
What improvements have been seen in the financial performance of listed real estate developers?
66% of listed real estate developers now have operating margins above 20%, and 62% have net profit margins above 10%. Additionally, the proportion of firms with a debt-to-equity ratio below 0.5 has risen from 43% to 62%.
How many real estate IPOs have been launched in 2025 so far?
Seven real estate IPOs have been launched in 2025 so far, raising a total of ₹7,630 crore.
What are the key factors driving the positive outlook for the real estate sector in India?
The positive outlook is driven by strong end-user demand, favorable demographics, rising disposable income, and relatively lower interest rates.
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