Reality check as property market slumps in India

With the global credit crisis leading to the worst slowdown in the Indian real estate market in recent times, agents and developers are hoping the festive season surrounding Diwali, the Hindu festival of lights, will drive away the gloom. Coming at the end of October, Diwali will prove a crucial period for developers as many Indians consider it to be the start of the Hindu business year and an auspicious time to start new ventures, buy property and expensive consumer goods.

Indian cities enjoyed a real estate boom for nearly four years, ending 2007. After being stagnant for the first part of the year, property prices slid about 15% during the last two months in key metro areas like New Delhi or Mumbai and fast-growing cities like Bangalore and Pune.

Apart from prime locations in such cities, price corrections of up to 15% could continue in the residential, office and retail space.

Realty consultants said the property market will be affected for at least a year.

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