The Rise and Fall of Nifty Realty: From Market Boom to 2025’s Worst-Performing Sector

Just a year ago, India's real estate market was thriving, riding high on a post-pandemic boom that saw surging demand for luxury housing. Investors poured in capital, developers launched ambitious projects, and the Nifty Realty Index soared to an all-time high of 1,157 in June 2024. The sector seemed unstoppable—until the tide turned.

Now, in 2025, the real estate market tells a different story. The Nifty Realty Index has plummeted nearly 20% year-to-date (YTD), cementing its place as the worst-performing sector in the Indian stock market. From its peak, it has shed over 26%, officially entering bear market territory.

What Triggered the Real Estate Slump?

Regulatory Hurdles and Liquidity Crunch

Investor confidence took a hit as regulatory challenges and liquidity concerns mounted. Despite the Reserve Bank of India’s (RBI) recent rate cut, meant to ease liquidity pressures, the sector remains under stress. The lack of clarity in policy implementation and delays in project approvals have only added to the woes of developers and buyers alike.

Market-Wide Risk Aversion

The broader stock market has also experienced volatility, leading to risk aversion among investors. Real estate stocks, historically dependent on sentiment-driven investments, have borne the brunt of this shift. With election uncertainties, inflationary pressures, and shifting buyer priorities, the once-thriving sector is now struggling to find stable ground.

A Sector-Wide Bloodbath: Realty Stocks in Freefall

Every constituent of the Nifty Realty Index has reported negative returns in 2025. Among the worst-hit are:

• Oberoi Realty (-29%) – The steepest fall, exacerbated by legal issues surrounding the Sahara Versova land dispute.
• Godrej Properties, Prestige Estates, and Sobha (-26%) – Hit hard by weak investor sentiment and sluggish project execution.
• Mahindra Lifespace (-22%) – Struggling under financial constraints and slowing sales.
• DLF, Raymond, Macrotech Developers (-14% each) – Major developers witnessing consistent declines.
• Phoenix Mills (-2%) – The most resilient stock in the index but still in the red.

The Supreme Court Verdict and Its Impact

Adding to the sector’s troubles, the Supreme Court of India recently ordered the Maharashtra government to clarify the environmental status of the Sahara 106-acre Versova land. The court also ruled for the return of ₹1,000 crore in deposits to Oberoi Realty, further shaking investor confidence. This legal uncertainty has introduced a fresh wave of skepticism among stakeholders.

Can RBI’s Rate Cut Save the Market?

Despite the turmoil, some experts remain cautiously optimistic about the sector’s long-term outlook.

Liquidity Boost?

Shrinivas Rao, FRICS, CEO of Vestian, highlighted that the RBI’s 25 basis points (bps) rate cut—the first in nearly five years—could improve liquidity by prompting banks to reduce mortgage rates. This, in turn, may encourage homebuyers by making loans more affordable.

However, there is a flip side—a lower interest rate could put downward pressure on the rupee, potentially impacting foreign investments in the sector.

A Revival in Housing Demand?

According to Vimal Nadar, Head of Research at Colliers India, housing demand has started to stabilize after an extraordinary sales surge in the past two to three years. He believes the RBI's rate cut comes at the right time and could help revive homebuyer sentiment in the near future.

The Road Ahead for Real Estate

The Indian real estate sector stands at a critical juncture. While short-term challenges persist, the potential for long-term recovery remains. With regulatory clarity, easing liquidity pressures, and evolving market dynamics, the sector could regain its lost momentum. For now, however, investors and stakeholders must navigate cautiously through this turbulent phase.