INDIA: October to November is traditionally the biggest shopping time in India. Real estate sales can go up to 60 per cent during this period.

This year, realtors are offering huge discounts as well as freebies like cars and jewellery to attract buyers. But not many are taking up the offer.

B.P Singh, an investor, said: “Everyone is feeling the heat of the economic slump. I am already tensed about how I would manage during this crisis. My business is on a low and I can't think of spending anymore (on my house construction) right now. This is a sad Diwali for everyone.”

The global economic meltdown has taken its toll on India's real estate sector.

DLF, the country's largest developer lost three fourths' of its value in the past month.

At construction sites, like this one there is little or no activity.

Lalu Shah, a construction worker, said: “Our payments have been drastically reduced and some of us are not even getting paid as the work has stopped (here).”

Real estate developers dependent on foreign investment are also feeling the pinch.

They have had to slow down their projects because foreign buyers are cutting back.

To add to their woes, they're seeing their funds dry up as banks hold back on disbursement of loans.

It's a squeeze from all sides

Harinder Dhillon, general manager, marketing, Raheja Developers, said: “There has been a minor slowdown. No doubt at all. If people are losing jobs, not getting bonuses or getting increments, of course this impacts all markets. It impacts automobiles, civil aviation as well as real estate. No industry in this economy has been left untouched and that is the reality.”

This is a rare occurrence in India.

In the past prices fell negligibly in small towns and sales activity slows down in the suburbs but nobody remembers a nationwide overall fall in home prices.

Some builders said that India has such a huge population, that even if you keep building for 40 years at the current pace, there will still be a shortage of housing.

But there is no denying the fact that house purchase plans have been shelved by middle class India. - CNA/vm