The impact of recession in US economy has badly hit Indian real estate market along with sectors like retail, steel, cement, hospitality and logistics. Till October 2008 the real estate industry was a very booming industry in India. Also the high net worth of individual investors especially those involved in retail and IT had created a very fast pace of demand in Indian real estate sector which have gain a very high impact image of investing in India. But the downturn produced shocking waves in the real estate market, which further impacted sectors like retail, cement and iron. The result is unavoidable.

Relating only retail to real estate, the scene is bad. Its pace is equivalent to zilch today. In the time of recession, no retail company wants to buy exorbitantly high priced spaces, neither they want to pay highly charged rents. While just a year ago, the retail industry was the next big hope for India's economy. Stores were opening everywhere, with sprawling malls and tony boutiques holding glitzy launch parties across the country. Retailers bought up every inch of space in India's largest cities, sending real estate prices through the roof. Even India's small towns caught mall-mania. But as India's economy feels the impact of the global recession, Indian consumers are cutting back on spending, and retailers are facing a major slowdown and hence, real estate. For a deeper insight into the industry, Financial Times sought comments of people on - "Are retail real estate blocked funds nowadays?"

Recession being a worldwide phenomena, has affected every trade and industry. The change in corporate's business strategy to relocate from high cost to lower cost locations with a similar slow down in the IT-ITES industry has seen vacancy levels going up in the retail / office space, as most of the stock was created in anticipation of the demand. I don't fully subscribe to the view that retail real estate are blocked funds nowadays as the buyers still have an option of offering reduced rental costs to the retailer. If a comparison of ROI is made in today's market, the return from retail real estate market is pegged at somewhere in-between 11% to 15% depending upon the location of the property, whereas banks seldom offer return of more than 10% per annum. India 's favourable demography, low mortgage penetration, falling interest rates and ongoing infrastructure demand will keep the retail real estate property downturn from being protracted.