The Nifty Realty has been one of the weakest sectoral performers over the past year. While the benchmark Nifty 50 slipped 6 per cent, the real estate index fell 22 per cent during the same period.
Godrej Properties led the decline, losing 40 per cent of its value, followed by Brigade Enterprises, which was down 33 per cent.
Unless the festival season brings a surprise lift, the slump is likely to persist. Third-quarter (Q3) housing sales volumes have dropped 9 per cent, prices have climbed sharply, affordability has eroded, and the job market remains weak.
The sector's outlook hinges on housing sales -- and the latest numbers don't inspire confidence. Estimated sales volumes across the top seven cities fell 9 per cent year-on-year to 97,000 units in Q3 2025, from 107,000 units a year earlier.Despite the drop, total sales value rose 14 per cent, pointing to demand for luxury and super-luxury housing. Average residential prices in these cities grew 9 per cent over the same period.
"While affordability remains stretched in most cities, price growth has cooled from the double-digit pace of the past few years,' said Anuj Puri, chairman, Anarock Group.
Motilal Oswal said developers' operating performance in the first quarter (Q1) of 2025-26 (FY26) fell short of expectations due to delayed project launches affecting presales. The brokerage has kept its FY26 presales forecasts intact but will track launches and deliveries closely. Prestige Estates Projects and Lodha Developers (formerly Macrotech Developers) remain among its preferred bets.
Even with slower overall volumes, presales for listed developers have held up well. They rose 19 per cent in 2024-2025 and 39 per cent in Q1FY26. Lodha has guided for 20 per cent growth in FY26 presales, Godrej expects 10 per cent, and Prestige is aiming for 47 per cent, helped by spillover demand from the previous year.
The property market has shown resilience, and large branded players are constrained more by supply than demand, said Nomura. It views the correction in real estate stocks -- driven by seasonal weakness, economic uncertainty, and job-loss headlines -- as a buying opportunity. Stocks such as Lodha, Oberoi Realty, and Aditya Birla Real Estate offer long-term value, it added.
Nuvama analysts argue that stock performance will depend on how the housing cycle broadens, the product mix, and interest rate cuts. They don't expect a quick fix for weak volume growth, given shrinking affordability and the limited supply of mid-income housing. They expect volatility to persist, with mortgage rate cuts cushioning the downside but valuation and volume concerns capping the upside.
-- Ram Prasad Sahu, Business Standard
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