Real Estate Stocks Slump Amid Demand Sluggishness Concerns

Mumbai: Real estate stocks fell on Wednesday, extending their losses into the third session, as concerns over slowing demand prompted investors to take profits. The realty index dropped over 2%, taking its loss tally in the past three days to 3.5%, compared with a 1.1% decline in the benchmark Nifty.

Eight of the 10 stocks in the index fell on Wednesday. Godrej Properties slid 4%, while DLF and Oberoi Realty fell 3.5% and 2.8%, respectively. Lodha Developers and Phoenix Mills each lost more than 2%.

"Realty stocks are seeing some profit-taking after the runaway rally last year, as the demand for real estate has turned sluggish while the supply remains strong," said Dharmesh Kant, head of research at Cholamandalam Securities. He added that further declines of 5-7% cannot be ruled out. In the premium segment, new launches have been limited after the euphoric demand last year, while mid-tier real estate players have also seen muted business.

The Nifty Realty index has risen 325% over five years, compared with the 127% gain in the benchmark Nifty. About 35% of those gains came in 2024, when the Nifty rose 8.8%. So far in 2025, the index is down 14.4% against the 5.5% advance in the benchmark.

"Now when the broader markets are witnessing a pullback, the selling pressure in these stocks intensified due to unwinding of positions," said Ruchit Jain, head of technical research at Motilal Oswal Financial Services.

In the past month, the realty index has lost 2.8%, compared with a 0.4% rise in the Nifty.

"While some realty stocks did see price up moves, the volumes were subdued," Jain said. "However, the higher volumes during the declines indicate bearish sentiment."

"The verdict on the tariffs is expected by November-December, until then the volatility is expected to sustain," Kant said.