Sector-Wide Selloff Deepens Amid Soaring Property Prices and Investor Caution

Real estate stocks extended their losing streak for the fourth consecutive session on February 27, with the Nifty Realty index falling over 2%. The correction, now exceeding 5% over four sessions, reflects growing concerns over investor interest in the sector amid skyrocketing property prices in major metro cities.

Prestige Estates emerged as the worst-hit stock, plunging nearly 5% after an Income Tax (I-T) search at its registered and branch offices. The company, in an exchange filing on February 25, stated that the financial impact of the search remains uncertain but assured full cooperation with authorities.

Top Losers in the Realty Sector

Several major real estate stocks saw sharp declines:

Prestige Estates: Down 5%, leading the sectoral fall.
Phoenix Mills: Dropped nearly 4%, trading at ₹1,503 per share, now 27% below its 52-week high of ₹2,068.
Raymond, Mahindra Lifespace Developers, DLF, and Godrej Properties: Fell over 2% each.
Macrotech Developers and Oberoi Realty: Declined about 1.5%.
Sobha: Registered marginal losses.

The only exception to the broader downturn was Brigade Enterprises, which bucked the trend, trading with marginal gains at ₹980 per share.

Market Correction Amid High Property Prices

The real estate market correction is being attributed to escalating property prices in metro cities, which have priced out end-users, leaving the market heavily reliant on investors and speculators.

National Capital Region (NCR) property prices surged over 50% in 2024.
Other major markets have also witnessed double-digit price increases, adding to affordability concerns.

According to Dhruv Agarwala, Group CEO of Housing.com & PropTiger.com, 2025 may not be a record year for sales but rather a year of consolidation. He cautioned that rapid price escalations often lead to speculative buying, making housing inaccessible for genuine buyers.

“A cooling market could stabilize prices and bring back end-users. A course correction is already happening. The question is whether it will persist or flatten. Stability isn’t bad, as it strengthens the market by bringing back end-users,” he noted.

Outlook: Real Estate Stocks Under Pressure, Stability Key for Long-Term Growth

While real estate stocks have been strong performers in recent years, the current downturn signals a shift in investor sentiment, influenced by:

Regulatory scrutiny, as seen in the Prestige Estates I-T search.
Sky-high property prices, limiting affordability.
Concerns over sustainability of growth, as speculation-driven demand may not be sustainable.

Investors are likely to remain cautious in the near term, watching for signals of market stability before making fresh bets on the realty sector.