Real estate stocks fall for 7th straight day: Analysts say D-Street is factoring in a likely slump due to IT layoffs

• Real estate stocks fell for the 7th session, Nifty Realty hits a 9-month low.
• IT layoffs are impacting housing demand, especially in luxury urban segments
• Analysts foresee more declines unless policy changes or rate cuts aid the sector.

Did our AI summary help?

The shares of real estate companies dropped in trade on January 14, recording a decline for the seventh consecutive session. Analysts have collectively highlighted how sustained IT layoffs may continue to impact the sector, and what lies ahead.

The sharp fall in the share prices pushed the Nifty Realty index down around 1.7 percent to hit a near nine-month low of 843.60 in the morning trading hours of Wednesday. The sectoral index fell a combined 8% in the last seven trading sessions.

Top realty losers today:

Signatureglobal (India) shares dropped over 2 percent, while Prestige Estates shares fell around 2 percent. Macrotech Developers (Lodha), Brigade Enterprises and Phoenix Mills shares fell more than 1 percent each on January 14.

Anant Raj and Godrej Properties shares fell around 1 percent each, while Sobha shares were down in the red with marginal losses. Bucking the trend, Oberoi Realty and DLF shares were trading in the green with marginal gains.

Are IT layoffs behind the downturn?

Indian IT sector has seen mass layoffs last year, which have now spilled over to this year. In July last year, Moneycontrol exclusively reported that the IT behemoth Tata Consultancy Services will be letting go of 2 percent of its workforce, or roughly over 12,000 employees, over 2026, in a bid to become more agile and future-ready amid rapid disruptions in technology.

India’s largest IT services company on January 12 said that it has released 6,000 employees in Q2, and around 1,800 employees in December quarter.

HCLTech, which also released its Q3 results on January 12, reported a net reduction of 261 employees during the quarter, taking its total employee base to 2,26,379 at the end of the December. However, the company didn't mention how many of these employees voluntarily exited and how many were laid off.

According to analysts, the IT layoffs have impacted housing demand in key areas, thereby impacting the stocks. IT layoffs are likely to be the major reason for the low demand in the luxury segment of urban centers like Bangalore and Hyderabad as they will be discouraging the high-income buyers, said Shashank Gupta, Director, RPS Group.

He added that mid-to-premium housing sales, which have already dropped 15 percent year-on-year, will continue to be affected negatively as the professionals will not be willing to upgrade, opting instead to rent amid such job uncertainties.

"The market has whispered to the executives with Nifty Realty down by 20% from the peaks and talking about the disruption posed by the AI, which also indicates that 30% of the IT jobs that are luxury demand would get stifled due to the automation by 2027. The stock corrections that are expected to be around 5-7% are dependent on the RBI rate cuts and policy revamps that could fuel the market by the second quarter of 2026," the analyst said.

Keshav Mangla, GM Business Development at Forteasia Realty, cited Anarock data to explain that financial tech layoffs of more than 1 lakh since 2024 have already resulted in a 12 percent drop in the demand for Tier-1 cities, thus resulting in developers' difficulties in managing cash flows and having to sell off their inventory.

'A double-edged sword for real estate stocks':

"The stock market does not seem to be giving enough attention to the AI threat; the tools for generative AI are expected to take away 20-25% of the coding jobs which can bring down the HNI investments that are responsible for 30% of luxury property launches," Mangla said.

The continuous IT layoffs, which are expected to reach 2,00,000 by FY27, are a double-edged sword for real estate stocks which are currently at multi-month lows, said Anurag Goel, Director, Goel Ganga Developments. He explained that this was because the IT layoffs will cause a further reduction in purchasing power in the markets relying mostly on IT where 35 percent of home loans are taken out.

What is in store for the future?

"The lowest ever prices for Brigade and Sobha indicate the investors' fears about the prolonged sales stagnation, as the number of launches in Q3 2025 has declined by 18%. The stock market is taking into account the AI risks only to a certain extent since companies like Infosys that are hyperscalers are moving towards automating and thus, displacing the mid-level talent and consequently, the demand for flats costing Rs 10 lakh-Rs 30 lakh is being affected," Goel said.

"A slight hopefulness," said Goel while speaking about what lies ahead. However, he expects the real estate stocks to decline by another 8 to 10 percent more in the absence of a stimulus.

Is there a silver lining?

While headlines around IT layoffs and AI-led efficiency gains have raised concerns, the market is already discounting a slowdown in incremental office demand rather than a collapse, said Harshal Dasani, Business Head, INVasset PMS.

"AI is more a productivity lever than a demand destroyer at this stage. It may change how space is used, but it does not eliminate the need for physical offices, especially in collaborative and client-facing roles," Dasani explained.

He added that residential demand remains supported by stable employment outside pure tech, improving balance sheets, and low speculative supply. "Near-term consolidation is possible, but structurally, the sector is adjusting—not breaking," the analyst said.

Follow all LIVE updates from the stock markets here.