In bear grip: Nifty Realty tanks 26% from peak, turns worst-performing sector in 2025 YTD

The Indian real estate sector has been one of the worst-performing segments of 2025 so far, with the Nifty Realty Index plunging nearly 20 per cent year-to-date (YTD). The index, which peaked at 1,157 in June 2024, has now declined over 26 per cent from its highs, entering the bear market territory.

This sharp correction highlights investor concerns over regulatory challenges, liquidity constraints, and market-wide risk aversion despite positive policy measures such as the Reserve Bank of India’s (RBI) recent rate cut.

The Nifty Realty index dropped 12 per cent in January, followed by an additional 8 per cent decline in February, making it the worst-performing sector in the Indian stock market.

The real estate sector had witnessed an unprecedented post-pandemic boom, particularly in the luxury housing segment, which saw soaring demand and premium pricing. However, sentiment has soured in recent months due to post-election uncertainties, delays in project approvals, inflationary pressures, and concerns over liquidity.

Top losers in Nifty Realty index

All 10 constituents of the Nifty Realty Index have reported negative returns in 2025 so far. Among the worst-hit stocks, Oberoi Realty has plunged over 29 per cent year-to-date (YTD), followed closely by Godrej Properties, Prestige Estates, and Sobha, each falling more than 26 per cent.

The recent Supreme Court order seeking clarification from the Maharashtra government on the environmental status of Sahara’s 106-acre plot in Versova, Mumbai, has further impacted investor sentiment. The court has decided not to examine the bids at this stage and has ordered the return of ₹1,000 crore in deposits to Oberoi Realty.

Other major realty players such as Mahindra Lifespace (-22 per cent), Brigade Enterprises, DLF, Raymond, and Macrotech Developers (Lodha) (-14 per cent each) have also witnessed significant declines. Phoenix Mills, while also in the red, has been the most resilient stock in the index, down by just 2 per cent YTD.

Will realty sector rebound?

Despite the ongoing sell-off, analysts remain cautiously optimistic about the long-term growth prospects of the real estate sector. However, near-term headwinds such as market-wide risk aversion, regulatory bottlenecks, and concerns over future demand continue to weigh on the sector.

Shrinivas Rao, FRICS, CEO of Vestian, highlighted that the RBI’s recent 25 basis points (bps) rate cut—the first in nearly five years—will improve liquidity conditions. He expects the reduction to bolster the real estate sector by prompting banks to lower mortgage rates, making home loans more affordable. However, he also noted that the rate cut could put downward pressure on the rupee, which may impact foreign investment inflows.

Meanwhile, Vimal Nadar, Head of Research at Colliers India, pointed out that housing demand had started to stabilise after record-breaking sales over the past two to three years. He believes the rate cut has come at an opportune time, potentially reviving homebuyer sentiment. 

Nadar also highlighted the impact of recent budgetary measures, including the creation of the Urban Challenge Fund and tax relief under the new regime, which could stimulate urban development and domestic consumption. Additionally, the ₹15,000 crore allocation for the SWAMIH II fund is expected to accelerate the completion of stressed real estate projects, further enhancing liquidity and boosting home-buying sentiment.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.