Nifty Realty index slides nearly 12% YTD; Godrej Properties, Lodha Developers, Oberoi Realty, DLF lead fall

The Nifty Realty index has emerged as one of the worst-performing sectoral indices so far in 2026, slipping nearly 12% year-to-date (YTD) amid profit-booking after a multi-year rally, concerns over elevated property valuations, and weak quarterly pre-sales reported by several large developers.

On Thursday, the index fell over 1%, extending its decline for the fourth straight session. Since the start of the year, Nifty Realty has shed around 104 points, or 11.75%.

Exchange data show that all 10 constituents of the index are trading lower for the year so far, led by heavyweight names such as Godrej Properties, Lodha Developers, Brigade Enterprises and DLF, with many stocks slipping to or hovering near their 52-week lows.

Among individual stocks, Godrej Properties has declined over 20% YTD, while Lodha Developers and Brigade Enterprises are down around 11–14%. Oberoi Realty, which reported a sharp slowdown in sales momentum, has fallen nearly 13% this month, while Prestige Group and DLF are down close to 12%.

Weak Q3 pre-sales weigh on sentiment

A key trigger for the sector’s underperformance has been disappointing Q3 FY26 pre-sales numbers from several leading developers. Oberoi Realty reported a steep 56% year-on-year decline in pre-sales during the December quarter, while others posted muted volumes due to fewer new project launches and cautious buyer sentiment.

In some cases, the lack of fresh inventory launches during the quarter further hurt sales momentum, prompting analysts and investors to reassess growth assumptions embedded in stock valuations.

Industry data also suggest that a sharp rise in residential property prices has begun to weigh on demand, particularly in the mid-premium and premium segments. With prices in several urban markets rising faster than income growth, affordability concerns have resurfaced.

This has been compounded by uncertainty in the IT sector, a key buyer base for urban housing. Slower hiring, delayed salary hikes and global demand concerns have made prospective buyers more cautious, especially when it comes to big-ticket purchases.

Weak broader market adds to the fall

The correction in real estate stocks has also been amplified by broader market weakness. Persistent selling by foreign institutional investors (FIIs), coupled with heightened volatility ahead of the Union Budget 2026–27 and upcoming US Federal Reserve policy decisions, has weighed on high-beta sectors such as real estate.

The equity benchmarks Sensex and Nifty have fallen nearly 4% in CY26 amid heightened geopolitical tensions, sustained foreign fund outflows, and persistent uncertainty over India-U.S. trade deal.

So far this month, foreign portfolio investors (FPIs) have withdrawn ₹32,253.55 crore from Indian equity market, with gross purchases of ₹1,53,046.26 crore offset by gross sales of ₹1,85,299.81 crore. On January 20 alone, FPIs were net sellers to the tune of ₹2,938.33 crore.

In contrast, domestic institutional investors (DIIs) remained net buyers, helping cushion the impact of foreign outflows. Month-to-date, DIIs have infused a net ₹41,976.70 crore into equities, with gross purchases of ₹2,24,667.96 crore against sales of ₹1,82,691.26 crore. On January 20, DIIs recorded net purchases of ₹3,665.69 crore.

Broker view

Domestic brokerage firm Ambit Capital, in a recent report, flagged valuation sensitivities and execution risks, even as it maintained a constructive stance on developers with strong project pipelines and annuity exposure.

Ambit has a ‘Buy’ rating on Prestige Estates Projects Ltd (PEPL) and Aditya Birla Real Estate (ABREL), while maintaining a ‘Sell’ rating on Godrej Properties (GPL), citing valuation concerns and differing risk-reward profiles.

While the brokerage remains positive on Prestige’s diversified portfolio and execution track record, it cautioned that delays in project approvals could slow sales momentum, and that persistently high land prices may impede the pace of future expansion.

In contrast, Ambit maintained a ‘Sell’ on Godrej Properties, even as it acknowledged the company’s operational strengths and potential market-share gains. Godrej Properties is valued using a project-based NAV methodology, along with DCF analysis for its residential and annuity portfolio, based on assumptions of a 13% cost of equity, 40% target debt ratio, and 4% terminal growth rate.

The brokerage noted that sector consolidation—driven by the inability of regional players to scale up—could benefit Grade-A developers such as Godrej Properties, though current valuations limit upside.

Ambit also reiterated a positive outlook on Aditya Birla Real Estate, highlighting the company’s optionality as it scales up its development business. The brokerage values ABREL using a project-based NAV methodology for its residential portfolio and DCF for annuity assets, assuming a 13.5% cost of equity, 45% target debt ratio, and a 5% terminal growth rate, higher than peers to reflect longer-term growth potential.

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