Citing reasons for the decline, the Colliers Jardine report says that Moody's downgrading of Indian debt, the re-emergence of the Asian crisis and the slowdown of investments in the region have affected the real estate market in Indian metros and, as a result, demand continues to be weak.

Says Sudhanshu Tandan, general manager, northern region, Colliers Jardine, "In Delhi, the capital values in the prime residential areas were stable with no significant movement. The values were in the range of Rs 4,000 to Rs 8,000 per sq ft for preferred areas such as Central Delhi, Greater Kailash, Vasant Vihar and Hauz Khas. Implementation of the Malhotra Committee report will increase the supply of premises in almost all the prime residential areas, as the report provides for an increase in the FAR (Floor Area Ratio)."

The government's decision to allow entry of the private sector to develop housing shall have a long-term impact and will increase supply.

On the rental values in Delhi, Tandan says, "Rental values reduced only marginally by 2-4 per cent across the city. It has been observed that an increasing number of builders in South Delhi are converting bungalows into apartments, which are preferred in the lease market."

An interesting development in Delhi has been the decline in hotel occupancy rates to 55-60 per cent. The Colliers Jardine report points out that an additional supply of approximately 800 new rooms is expected by the end of this year, as Grand Hyatt and Marriott International are expected to complete their hotel projects in the Capital. Also, Maurya Sheraton is implementing its expansion plan, which would increase supply by another 50 rooms. Occupancy rates are expected to remain stagnant and hence the average room tariff shall be under continued pressure.

In Mumbai, the capital values for residential properties have not changed significantly in most prime areas such as Napean Sea Road, Cuffe Parade, Malabar Hill, Worli, Bandra, Andheri and Santa Cruz. Rental values declined marginally and there continues to be a scarcity of good quality, large apartments in South Mumbai.

As for the hotels, due to the reduction in the number of travellers, average occupancy rates weakened and were in the range of around 55-60 per cent as compared to 90 per cent in 1995-96.

In Bangalore, due to lack of funds amongst developers, the construction of residential accommodation has slowed down. Capital values weakened further by up to 5 per cent. Capital values of prime apartments in central areas were relatively stagnant and are expected to decline further over the next six months.

Areas such as R T Nagar, Indiranagar, Koramangala Dollars Colony and BTM Layout have developed significantly over the past two years. However, suburban development projects have slowed down to a minimum, says the report.

The rental values in Bangalore's residential apartment complexes remained the same as landlords exhibited their willingness to wait and watch. Independent houses were preferred over posh apartments in the high rental range. Colliers Jardine sees an increase in demand for such independent houses by top-level management, specifically in the central areas of Bangalore.

In Chennai, owing to lack of liquidity in the residential market, most developers offloaded their properties at discounts. Capital values in up-market residential locations such as Besant Nagar, Kalakshetra and Greenways Road were in the range of Rs 2,000 to Rs 2,500 per sq ft.

With prices declining all over the country, it is a good time to look for that elusive roof over your head. In fact, the Indian real estate market is entering the final stage of its correction phase. With most metros having witnessed an overall decline in the range of 20-40 per cent in the last two years, the market is now reaching realistic levels and genuine buyer interest is re-emerging, albeit slowly.