Why Financial Discipline Among Builders Matters to You
The biggest fear for any homebuyer in India is that the builder will delay or default. That fear isn’t unfounded—hundreds of projects were delayed or stalled in the last decade due to bad finances, over-leverage, or funding crunches post NBFC crisis and COVID. But this is changing.
Indian real estate is undergoing a silent transformation.
Builders, especially listed ones, have restructured their debt, improved profitability, and regained the trust of banks and investors. What this means for the average homebuyer is simple yet powerful:
➡️ Lower risk of delays
➡️ More financially sound developers
➡️ Better delivery timelines and completion assurance
This report by Colliers India presents strong data-backed evidence that financial discipline is now a defining strength of the sector—and that’s good news for homebuyers.
📊 Credit Confidence: Bank Lending to Real Estate Doubled Since FY21
A key indicator of this transformation is the willingness of banks to lend to the real estate sector again. The loan book for real estate has doubled in four years, growing from ₹17.8 lakh crore in FY 2021 to ₹35.4 lakh crore by FY 2025.
📌 Table 1: Growth in Bank Lending to Real Estate
| Year | Total Bank Credit (₹ lakh cr) | Credit to Real Estate (₹ lakh cr) | Share of Real Estate |
|---|---|---|---|
| FY 2021 | 109.5 | 17.8 | 16.3% |
| FY 2022 | 118.9 | 20.2 | 17.0% |
| FY 2023 | 136.8 | 23.1 | 16.9% |
| FY 2024 | 164.3 | 31.9 | 19.4% |
| FY 2025 | 182.4 | 35.4 | 19.4% |
Source: RBI, Colliers India
🗣️ Quote:
“The strong financial health of the sector is demonstrated by significantly higher credit rating upgrades and increased exposure from banks. Lenders see real estate as less risky now.”
— Badal Yagnik, CEO, Colliers India
📉 NBFCs Slow, But Not Out
While NBFCs have become cautious since the 2018 crisis, their credit book has still grown in absolute terms.
📌 Table 2: NBFC Lending to Real Estate
| Year | Total NBFC Credit (₹ lakh cr) | Credit to Real Estate (₹ lakh cr) | Share of Real Estate |
|---|---|---|---|
| FY 2021 | 27.0 | 1.0 | 3.7% |
| FY 2023 | 34.0 | 1.1 | 3.2% |
| FY 2025 | 42.9 | 1.3 | 3.0% |
Note: Data till September 2024. Includes mid and upper layer NBFCs.
🧮 Builders Are Profitable Again — And That Makes Them Safer
The financial discipline isn’t just about debt—it’s about how much profit builders are generating and how much debt they carry.
In FY 2021, only 23% of top 50 listed real estate companies had net profit margins above 10%. By FY 2025, that number had nearly tripled to 62%. Similarly, the share of low-debt companies (debt-to-equity < 0.5) rose from 43% to 62%.
📌 Table 3: Financial Health Metrics – FY 2025 vs FY 2021
| Metric | FY 2021 | FY 2025 |
|---|---|---|
| Net Profit Margin > 10% | 23% | 62% |
| Operating Margin > 20% | 55% | 66% |
| Debt-to-Equity < 0.5 | 43% | 62% |
Source: Colliers India, based on top 50 listed companies
🗣️ Quote:
“More than 60% of large real estate players now have a debt-to-equity ratio below 0.5, showing how balance sheets are being cleaned up.”
— Colliers India Report
🔼 Credit Ratings Surge: 23:1 Ratio of Upgrades to Downgrades
Perhaps the strongest sign of transformation: credit rating upgrades.
While most sectors have seen a mix of upgrades and downgrades post-COVID, real estate has witnessed a 23:1 ratio of rating upgrades to downgrades in H2 FY 2025 — a signal of revived lender and investor trust.
📌 Table 4: Credit Rating Upgrade/Downgrade Ratio
| Period | All Sectors | Real Estate |
|---|---|---|
| H2 FY 2025 | 2.3 | 23.0 |
| H1 FY 2025 | 1.5 | 2.3 |
| H2 FY 2024 | 1.9 | 2.0 |
Source: Leading CRA, Colliers
📈 Real Estate IPO Boom – ₹400 Billion Raised Since 2021
Builders are not just borrowing—they’re also raising money through the equity market. This helps them reduce debt further and increase transparency.
In 2024 alone, 9 real estate IPOs raised ₹138 billion. So far in 2025, 7 IPOs have raised ₹76 billion — showing continued momentum.
📌 Table 5: Real Estate IPO Activity
| Year | Real Estate IPOs | Funds Raised (₹ billion) |
|---|---|---|
| 2021 | 6 | 108.4 |
| 2022 | 3 | 6.5 |
| 2023 | 5 | 69.0 |
| 2024 | 9 | 138.1 |
| 2025* | 7 | 76.3 |
Note: *Till July 2025
🗣️ Quote:
“The surge in public listings—across flex spaces, REITs, hospitality, and residential—indicates deepening investor faith in the sector’s long-term fundamentals.”
— Vimal Nadar, Head of Research, Colliers India
🔚 What This Means for Homebuyers
✅ More dependable builders — reduced chances of default or delay
✅ Faster project execution due to better cash flow
✅ More options to invest, including via REITs & SM-REITs
✅ Better loan availability, as banks now view real estate as lower risk
⚠️ What to Watch Out For
Even as the sector matures, homebuyers should be cautious of:
- Interest rate hikes that may affect home loan EMIs
- Unregulated or small developers with poor track records
- Legal clearances and land titles—financial health ≠ regulatory compliance
📌 Conclusion
The Indian real estate sector has emerged as a more disciplined, de-leveraged, and creditworthy industry post-COVID. For homebuyers, this shift means greater trust, lower risk, and wider choice. The message is clear — the sector is safer than it has been in years, but due diligence remains key.
Also Read: FY25 Residential Real Estate Outlook: Demand and Price Growth to Moderate
