NEW DELHI: Calendar 2007 belonged to the real estate stocks, when the BSE Realty index surged some 75 per cent. The very next year, the index slipped over 85 per cent, and most of the these stocks have not been able to look up ever since.Since December 2007, the BSE Realty index is down nearly 90 per cent till January 25, 2017. However, it is up around 5 per cent on a year-to-date basis.Worse, things are projected to turn bad again this year, as industry watchers have broadly predicted up to 30 per cent drop in sales in 2017 on the back of the government clampdown on black money. The implementation of the Real Estate (Regulation and Development) Act, 2016 is widely expected to shake up the industry, leading to some consolidation.Fitch Ratings expects property sales in India to fall by at least 20-30 per cent in 2017, owing to the disruption caused by demonetisation and a general caution among home buyers.Most builders are already sitting on high levels of unsold inventory and are likely to cut selling prices as demand weakens.“We expect risks to rise further for the builders this year, as leverage levels are likely to increase and liquidity is going to tighten. Home prices should decline this year as demand for residential property weakened significantly in the fourth quarter of 2016, following the demonetisation of large-value currency notes,” Fitch Ratings said.The cash ban in November 2016 made it harder for home buyers to use undeclared wealth for property payments.According to Knight Frank Research, the number of residential property units sold fell 44 per cent on a year-on-year (YoY) basis in Q4 of 2016, dragging down overall units sold in 2016 by 9 per cent.The volume of new units launched fell 61 per cent YoY.Real estate stocks have tumbled in tandem. Since January 2016, the share price of Unitech has slipped 33 per cent to Rs 4.56 till January 25, 2017, HDIL is down 19.28 per cent, Sobha Developers 18.17 per cent, Prestige Estates 15.29 per cent and Godrej Properties has gained 3.60 per cent in this period.Bucking the trend, Indiabulls Real Estate Oberoi Realty , DLF and Phoenix Mills advanced 24 per cent, 22 per cent, 14 per cent, 13 per cent and 10 per cent, respectively, during the same period.Fitch Ratings said top-tier homebuilders such as Indiabulls Real Estate and Lodha Developers – which benefit from brand values – are yet to cut home prices substantially.However, smaller and second-tier homebuilders across the country have started offering discounts of around 25-30 per cent to attract buyers.“The worst of the downturn in home sales is likely in the first quarter of 2017. Demand is likely to recover moderately in the second half of 2017, as the festive season approaches, and in the wake of up to 50-60 basis points rate cuts on home loans by banks,” the rating agency said.Gaurang Shah, Head Investment Strategist at Geojit BNP Paribas , said: “Selected real estate companies with good management and balance sheets will perform well in 2017. I believe the cement sector will be among the outperformers this calendar year.”The real estate industry has bearings on many aspects of the economy and fortunes of a number of sectors are linked to the robustness of the real estate sector.For instance, sales of plywood, tiles, cement and other sanitary products are directly linked to demand for real estate.“I see up to 20 per cent downside in the real estate stocks in 2017,” said G Chokkalingam, Founder of Equinomics Research and Advisory.“Investors should also stay away from sectors such as cement, paints, tiles and sanitary ware and plywood, as their fortunes are directly linked to the realty sector,” he said.The plywood sector has been facing challenges due to a slowdown in real estate demand as demand from individual home buyers was impacted badly in tier II and tier III cities. Demand is likely to remain weak over the next few quarters, brokerage Sharekhan said in a note.For the quarter ended December 31, 2016, Greenply Industries reported consolidated gross sales of Rs 384.50 crore, down 11.35 per cent from Rs 433.72 crore reported for the corresponding quarter last year.Shobhit Agarwal, Managing Director - Capital Markets, JLL India, said, “The demonetisation drive is bound to trigger further consolidation in the overcrowded Indian real estate industry. This move has already started affecting demand for developers who preferred unaccounted money, adding to their liquidity woes. Debt-laden developers, who have been gearing up for bigger cash crunch with the implementation of the Real Estate (Regulation & Development) Bill or RERA, now have demonetisation to add to their woes.”Some market experts believe that the sector may get some relief from the forthcoming Union Budget. Finance Minister Arun Jaitley will present the NDA government’s fourth budget on February 1, 2017.“We may see some relief for the real estate sector (in the Budget), which is struggling a bit at the moment,” Alastair Newton, Alavan Business Advisory, said in an interview with ETNow.