The real estate sector in India has grown 30% to 35% during the last five years, reflecting the rapidly-increasing demand for office, commercial and industrial space, as well as bigger homes now considered within the range of India’s prospering working classes. But the economic juggernaut has been slowing since earlier this year due to double-digit inflation, a severe liquidity crunch as fallout of the U.S. sub-prime crisis, and now, the possibility of economic activity shrinking as part of a global slowdown. The country’s growth estimates of 9% at the beginning of the year have been revised to well below 7%, and the effect is directly visible on the realty sector. “No one’s buying any more,” says Ashwani Shukla of New Delhi-based Triveni Associates, “Two years ago, 25-year-olds earning fat pay packets from [multinational corporations] were buying high-end apartments. Now, there are no takers for flats selling at 20% markdowns. Estate agents are finding it difficult to even meet daily overheads.”

Shukla himself has branched out of real estate and started selling insurance six months back, “to pay the bills.” According to various estimates, sales in cities like Mumbai and Chennai are down 30% to 40%. Hoping to induce buyers at Diwali, realtors are advertising cash discounts of 5% to 10% for down payments, and as much as 25% discounts if buyers are willing to wait two to three years before taking possession of the property. “But there is no liquidity with the end user,” says Arvind Nandan, director of consultancy at real-estate consultants Cushman and Wakefield India, “Home-loan rates have hit the roof, and people’s investments have lost value at the stock market. No one has the money to buy.”