Why Real Estate Stocks Are Slipping Despite RBI Rate Cut

Shares of real estate companies were under pressure, falling up to 4 per cent on the National Stock Exchange (NSE) in Monday’s intra-day trade, despite a 25 bps repo rate cut by the Reserve Bank of India (RBI) on Friday.

DLF, the country’s leading real-estate developer, along with Godrej Properties, Prestige Estate Projects and Anand Raj were down 4 per cent each, while, Macrotech Developers (Lodha), Sobha, Brigade Enterprises and Oberoi Realty were down in the range of 1 per cent to 3 per cent.

At 11:33 AM, the Nifty Realty index, the top loser among sectoral indices, was down 2.7 per cent, as compared to 0.5 per cent decline in the Nifty 50. In the past one month, the realty index tanked 8 per cent, as against 2 per cent rise in the benchmark index. Further, in the past six months, the Nifty Realty index has shed 16 per cent, as compared to the 4 per cent rally in the Nifty 50.

According to analysts at YES Securities, launches across key regions remained soft during the month of October 2025. At a pan-India level, new launches (msft) were down by 34 per cent year-on-year (YoY) & in unit terms the same was at a multi-month low.

Absorption remained steady during October 2025 at ~80.55msft, in-line with the average run-rate of the past 12 months. Consequently, inventory levels remained under control at ~15.6 months. While we witnessed minor price contraction in new launches, the average pricing of new sales inched up higher.

In the July to September quarter (Q2FY26), our real estate coverage universe saw a marginal 3 per cent YoY dip in pre-sales bookings owing to the absence of new launches from most developers and an extended monsoon season. Sustenance sales and collections remained healthy, said analysts at ICICI Securities.

Despite a soft H1, the companies remained confident of achieving their annual pre-sales targets led by a strong project launch pipeline for H2FY26, skewed towards Q4FY26, the brokerage firm said.

Meanwhile, residential real estate stocks under Kotak Securities coverage delivered another strong quarter in Q2FY26, reporting 43 per cent YoY growth in pre-sales, while H1FY26 pre-sales rose 44 per cent YoY, reaching 53 per cent of the full-year target of ~₹1.4 trillion (+20 per cent YoY). This robust momentum was led by DLF, Godrej, Sobha, and Prestige. In contrast, the broader industry saw a moderate 11 per cent YoY sales increase in Q2FY26, driven entirely by higher prices, as volumes remained flat at 236 million sq. ft.

Looking ahead, Pankaj Kumar, VP & Analyst Fundamental Research, Kotak Securities said high-end residential demand may see a moderate slowdown due to sharp price rises and softer sentiment among IT-sector linked buyers, though medium-term housing prospects remain strong. Despite selective slowdowns, listed players continue to benefit from modest industry trends, market share gains, and expansion into new markets.

Meanwhile, for DLF, cyclicality in the real estate segment causes fluctuations in cash inflow. As against this, cash outflow towards projects and debt obligations are relatively fixed, resulting in substantial cash flow mismatch. Any decline in the pace of sales could lower the expected collections over the medium term. Furthermore, occupancy and rental rates remain susceptible to economic downturns, which could constrain the tenant's business risk profile and thereby the rental collections of DLF, according to CRISIL Ratings.

Additionally, DLF’s reliance on the Gurugram real estate market has been high and any significant slowdown in demand or oversupply in the region may affect revenue. However, the company has a strong brand and is slowly focusing on geographical diversification and has re-entered the Mumbai market and has planned launches across Goa, Gurugram and Tricity (Chandigarh, Mohali and Panchkula). However, the extent of geographical diversification in the revenue profile will remain monitorable, the rating agency said in its rationale.