What goes up has to come down.On a high since 2005, Indian property market descended in 2008 with prices falling by 15-20 per cent.High interest rates regime and economic slowdown, coupled with the ripple effect of the US subprime crisis cooled off the overheated realty sector to some extent, forcing developers to adopt cost-cutting measures, such as deferment of projects, salary cuts and layoff of employees.

Developers, big or small, faced huge liquidity crunch as both end-users and investors shied away from the market. The sector's woes got further accentuated from the kind of battering it received at the stock market, with its share price falling like ninepins.The fall in sales volume was so sharp that turnover and profit of almost all the companies started to decline from the first quarter of 2008, which became more pronounced as the year progressed. "In 2008, the Indian realty sector took an unprecedented body blow.There has already been an overall drop of demand to the tune of 45-50 per cent," real estate consultant Jones Lang LaSalle Meghraj Chairman and Country Head Anuj Puri said. He pointed out that the prices of residential units fell by an average of 15-20 per cent across the country and said similar trend was witnessed in rentals for retail spaces.


The slump in demand forced developers to offer discounts and freebies to boost sales. But that did not help the industry, and sought government's help to come out of trouble.The Centre did not disappoint the industry and announced lower interest rates for home loans up to Rs. 20 lakh, which prompted the developers to focus on affordable housing.It was all well till the end of the last year and realty majors like DLF, Unitech and Emaar MGF were all set to raise huge capital from domestic and overseas markets in 2008 to fund their massive expansion plans. But the mood changed within a few months when Emaar MGF had to withdraw its maiden public offer of over Rs 7,000 crore in February because of bad market condition.On seeing the fate of Emaar MGF's IPO, many other realty firms decided not to try their luck in the capital market.The development was in complete contrast to 2007 when the sector emerged among the top fund-raiser with DLF leading the chart at over Rs 9,000 crore.

The realty index on the Bombay Stock Exchange fell by over 82.49 per cent at 2,283.52 points on December 30 compared to 13,037.89 points on January 1 this year. Unitech seemed to be the biggest loser with its scrip currently trading over 92 per cent down since the beginning of the year.The shares of DLF, IndiaBulls, HDIL, Sobha Developers, Omaxe and Parsvnath also crashed between 73 per cent and 90 per cent on the BSE during the review period.The crash in the global stock market also forced the country's two largest real estate firms, DLF and Unitech, to defer their public offer in Singapore indefinitely.Even though the developers bore the brunt of slowdown with falling sales and declining profits, they did not shy away from announcing projects with huge investments.Facing the heat, the major developers, including DLF and Unitech, which till last year were focusing on luxury housing, diversified their product portfolio to affordable housing. DLF announced to invest Rs 15,000 crore to develop 40,000 units, while Unitech said it would build 10,000 apartments with an investment of Rs. 2,500 crore over the next few years.

They would offer these housing units in the range of Rs 15-50 lakh. Omaxe announced a mammoth investment of Rs 80,000 crore in the next five years to build 10 lakh housing units, which the developer has planned to offer at Rs. 3 lakh to Rs. 15 lakh.Not being able to generate funds, the developers also had to put on hold projects involving big investments or slow down the construction work. Better late than never, the government came to the rescue of the industry and asked the public sector banks to announce cheaper home loans up to Rs. 20 lakh.Realising the impact of slowdown in the housing sector on other industries, like cement and steel, and its employment generation capacity, the government is mulling another package to boost the sector, expected to be announced in the new year. Hopefully, the second stimulus package will bring smile to the common man and provide much-needed relief to the real estate sector.