The Indian real estate sector has demonstrated remarkable growth, surging by approximately 30% to 35% over the past five years. This increase highlights the escalating demand for various types of spaces, including office, commercial, and industrial, alongside larger homes that have now become increasingly accessible to India’s expanding working population. However, signs indicate that this economic engine is now faltering, having experienced a slowdown since the beginning of the year. Factors such as double-digit inflation and a significant liquidity crunch stemming from the aftermath of the U.S. sub-prime crisis have compounded the problem. Presently, there are looming concerns that economic activity could diminish further, influenced by a potential global recession. Growth forecasts that initially projected a robust 9% at the year's start have now been adjusted downward to below 7%, and this change has resonated directly within the real estate sector. "No one’s buying any more," asserts Ashwani Shukla from New Delhi’s Triveni Associates. He reflects, "Two years ago, 25-year-olds, buoyed by substantial salaries at multinational corporations, were purchasing high-end apartments. Today, we find a stark decline in interest; there are no buyers for flats that are being offered at discounts of 20%. Real estate agents are struggling to cover daily expenses."
Shukla has since transitioned out of real estate, turning to insurance sales six months ago to manage financial obligations. Additionally, various reports indicate that property sales in major cities like Mumbai and Chennai have decreased by 30% to 40%. In an attempt to stimulate sales around Diwali, realtors are promoting enticing cash discounts ranging from 5% to 10% on down payments, with as much as 25% off for buyers who are willing to endure a waiting period of two to three years before taking possession of their properties. "However, the issue of liquidity persists for the end users," clarifies Arvind Nandan, the director of consultancy at Cushman and Wakefield India. He continues, "Home-loan rates have skyrocketed, and with many investments losing value in the stock market, the overall cash availability for purchases has dwindled significantly."