Nifty Realty down 5%; Lodha, DLF, Prestige Estates fall up to 6%: Check why

Shares of real estate companies fell as much as 7 per cent on Monday, March 23, as escalating tensions in West Asia triggered a broad-based selloff across sectors. 

 

On March 21, US President Donald Trump issued a 48-hour ultimatum to Iran, warning that Washington could target and “obliterate” its power infrastructure if the Strait of Hormuz, through which a significant share of global oil flows, was not reopened.

 

In response, Iran threatened to strike energy assets and critical infrastructure across the Gulf, including energy and desalination facilities, raising fears of a wider regional disruption.

 

The Nifty Realty index tanked over 34 points or 4.8 per cent to the day’s low at 662.85. In comparison, the benchmark NSE Nifty50 was quoting at 22,504.85 levels, down 609.65 points or 2.64 per cent.

 

 

At 01:30 PM, all 10 constituents of the Nifty Realty index were under heavy selling pressure. Lodha Developers, Sobha, Prestige Estates Projects, Signatureglobal (India), and Anant Raj slipped over 5 per cent each. Other major players, including DLF, Phoenix Mills, Oberoi Realty, Godrej Properties, and Brigade Enterprises, fell over 2 per cent. 

Here's what the analysts suggest:

While geopolitical tensions provided the immediate trigger, analysts point to a combined impact of internal pressures and shifting narratives that have left the sector vulnerable.

 

G Chokkalingam, founder and head of research at Equinomics Research, said the sector was already primed for a pullback due to "super-rich valuations" following a multi-year rally. 

 

"The rise in the real estate prices in the last 3-5 years impacted the industry prospects," he said. 

 

"When the war eventually broke out, it created a cumulative impact alongside the existing slowdown in demand. This is why real estate stocks have fallen by a significantly larger margin than the broader indices like the Sensex and Nifty," according to Chokkalingam. 

 

Adding to the valuation concerns, Sunny Agrawal, head of fundamental research at SBI Securities, notes that pre-sales booking growth rates have tapered down from double digits over the last couple of quarters, likely due to a higher base. "There are concerns that AI could lead to job losses, potentially slowing housing demand in IT-focused micro-markets like Pune, Hyderabad, and Bangalore," he said.

 

Additionally, he noted that external macro factors are squeezing the sector’s recovery timeline. Sustained high crude oil prices could force central banks to delay rate cuts or even hike rates, which negatively impacts rate-sensitive sectors like real estate.

 

Despite the sharp drop, Agrawal suggests that larger players with deep pockets and strong balance sheets can still manage growth by mobilising funds through equity or debt and expanding into new, higher-value territories. For example, Lodha has expanded into the northern belt, DLF has entered the Mumbai market, and Prestige is now well-entrenched in Mumbai as well. 

 

On the contrary, smaller players restricted to specific micro-markets may struggle if these negative narratives play out.