The real estate sector seems to be at the receiving end of the market meltdown, with the DLF scrip ending below its issue price. For the first time after its listing, the stock of India’s largest real estate developer closed below its issue price of Rs 525 at Rs 519.95.

Although it was closing at all-time lows in the past three trading sessions, it had managed to maintain the issue price. But the final blow came on 6th june when it breached the issue price mark. The BSE Realty index was the second-biggest loser closing 1.83% down.

In fact, only a third of all the real estate IPOs are trading in the positive, others are all below their issue price. The only exceptions were luxury apartment developer Orbit Corporation, which gave a whopping 270% returns, and Akruti City giving 50% returns.

Slum rehabilitation expert HDIL which is trading significantly lower from its 52-week high, however, has managed to sustain some of its returns trading at 30% above its issue price. Developers with a diverse product portfolio and strategically located land bank have been able to sustain the market pressure.

With the looming correction in land prices, there has been uncertainty amongst buyers about the future trend in prices. Besides this, the market mayhem has caused a major blow to high valuations that these companies were commanding. Brigade Enterprises, IVR Prime, Puravankara, Kolte Patil, Omaxe are all quoting at an average 75% below their issue price.

“Inflation numbers breaching previous records, high volatility in the equity market have dented investor confidence in the sector. It is still 3-6 months before the real estate sector revives itself,” says Jones Lang Laselle Meghraj V-P (Consulting) Ashutosh Limaye.

“With crude hovering at $130 a barrel and 10-year G-secs trading at 8.24%, interest rates are expected to harden further. This will have a negative bearing on the real estate sector,” says Mirae Assets Senior Fund Manager Gopal Agrawal.