Land transactions in India's real estate sector saw a sharp decline of 57% in the first quarter of FY25, according to a report by Anarock. The total land acquired was 325 acres, compared to 754 acres in the same period last year.

Several factors contributed to this downturn, including economic uncertainty and cautious investment sentiment. Developers are hesitating to commit to large-scale acquisitions due to fluctuating market conditions and regulatory changes.

The report highlights that major cities like Mumbai, Delhi-NCR, and Bengaluru experienced significant drops in land deals. Developers are focusing on completing ongoing projects rather than expanding land banks. This shift in strategy aims to mitigate risks associated with unsold inventory and financial liabilities.

The slowdown is also attributed to rising interest rates, which have increased borrowing costs for developers, impacting their ability to finance new land purchases. Additionally, the real estate sector is facing challenges from policy reforms aimed at increasing transparency and accountability.

Despite the overall decline, certain regions, such as Tier 2 and Tier 3 cities, showed resilience with moderate activity levels. These areas are attracting interest due to affordable land prices and emerging growth potential.

Analysts suggest that once economic conditions stabilise and confidence returns, the sector may witness a gradual recovery. Developers are advised to adopt innovative strategies and explore alternative funding sources to navigate the current landscape.

The report concludes that while the immediate outlook remains cautious, long-term prospects for India's real estate market continue to be positive.