Nifty Realty slides deep into bear territory; index tumbles over 26% from peak

The real estate sector is in a rough patch in 2025, with the Nifty Realty Index slipping into bear market territory. The index has declined nearly 20 per cent year-to-date (YTD) and has fallen over 26 per cent from its June 2024 peak of 1,157, making it the worst-performing sector so far this year.

A combination of liquidity constraints, regulatory delays, and market-wide risk aversion has triggered the sharp correction. This is despite the Reserve Bank of India’s (RBI) recent 25 basis points rate cut, which was aimed at improving financial conditions and boosting demand.

Nifty Realty’s steep fall: January and February hit hard

The sector’s troubles started early in 2025. In January alone, the index tumbled 12 per cent, followed by another 8 per cent drop in February. The post-pandemic surge in luxury housing demand had driven a strong rally, but concerns over post-election uncertainties, inflation, and project approval delays have dampened investor confidence.

All 10 constituents of the Nifty Realty Index have posted negative returns in 2025. Oberoi Realty is the worst hit, plunging over 29 per cent YTD. Godrej Properties, Prestige Estates, and Sobha have each dropped more than 26 per cent. The sector also faced a setback after the Supreme Court sought clarification from the Maharashtra government on the environmental status of Sahara’s 106-acre Versova plot, delaying potential deals. The apex court also ordered the return of Rs 1,000 crore in deposits to Oberoi Realty, adding to the uncertainty.

Mahindra Lifespace has slipped 22 per cent YTD, while Brigade Enterprises, DLF, Raymond, and Macrotech Developers (Lodha) have each lost around 14 per cent. The only relatively resilient stock has been Phoenix Mills, which is down just 2 per cent YTD.

Regulatory challenges and liquidity issues persist

The real estate sector, which saw a strong post-pandemic recovery, is now facing a slowdown due to tightening liquidity and delayed project approvals. The RBI’s rate cut, while positive, has not yet translated into improved market sentiment. Many developers are struggling with project financing as banks remain cautious about lending.

Additionally, regulatory hurdles, including delays in environmental clearances and state-level policy ambiguities, are adding to the sector’s woes. The uncertainty surrounding large-scale projects, coupled with rising input costs, has further dampened investor interest. With liquidity pressures mounting, developers are looking for alternative financing options to keep projects moving.

While the sector remains under pressure, further policy interventions and easing financial conditions could provide the much-needed support to revive investor sentiment and demand.