India’s real estate sector is experiencing a robust financial transformation, with bank credit doubling to over ₹35 lakh crore since FY2021 and companies raising approximately ₹400 billion through IPOs since 2021, according to a new Colliers India report.
Credit Surge Signals Lender Confidence
Bank lending to real estate has surged from ₹17.8 lakh crore in FY2021 to ₹35.4 lakh crore in FY2025, now representing nearly 20% of total bank credit deployment—up from 16.3% four years ago. This dramatic increase reflects growing institutional confidence in the sector’s financial discipline following structural reforms including RERA implementation, GST rollout, and post-pandemic recovery measures.
The credit quality improvement is equally striking: gross non-performing assets in construction industry loans plummeted from 23.5% in March 2021 to just 3.1% in March 2025, demonstrating enhanced risk management across the sector.
Corporate Fundamentals Show Marked Improvement
Analysis of India’s top 50 listed real estate companies reveals significant financial strengthening. Operating and net profitability margins improved substantially, with 62% of companies showing higher profitability in FY2025 compared to only 23% in FY2021.
Debt management has been particularly impressive—over 60% of leading real estate firms now maintain comfortable debt-to-equity ratios below 0.5, up from 43% in FY2021. This deleveraging trend reflects deliberate strategic focus on balance sheet optimization and operational efficiency.
Capital Markets Embrace Real Estate
The sector’s improved fundamentals have translated into robust equity market activity. Seven real estate IPOs worth ₹76 billion have already launched in 2025, continuing a strong fundraising streak that began in 2021. Credit rating upgrades significantly outnumber downgrades in the post-pandemic era, further validating the sector’s financial rehabilitation.
Strong Fundamentals Drive Outlook
“Indian real estate continues to demonstrate resilience and financial prudence even amid external volatilities,” said Badal Yagnik, CEO of Colliers India. The sector’s credit quality improvements are supported by strong demand-supply dynamics across residential, commercial, industrial, and hospitality segments.
Structural Transformation Complete
The past decade’s regulatory changes—including RERA, demonetization, the NBFC crisis, and COVID-19—have transformed Indian real estate into a more transparent, competitive, and financially disciplined sector. While NBFC exposure to real estate declined post-2018 crisis, banks have stepped up significantly, reflecting institutional confidence in the sector’s V-shaped recovery and sustainable growth prospects.
The combination of improved corporate governance, stronger balance sheets, and robust demand positions Indian real estate favorably for continued institutional investment and public market participation.
