Experts feel that it will be at least 12 to 18 months before the property markets finally bottom out. Meanwhile, its only gloom that looms large over the sector.

Even as the Urban Development Minister Ram Jethmalani has proposed several reforms and the Bill to repeal the Urban Land Ceiling Regulation Act has been placed in Parliament, the sector still doesn't have an industry status. Notwithstanding the fact that it is this sector that is first to bear the brunt of an economic downswing and political uncertainties.

``The capital value in Connaught Place is down by almost 50 to 60 per cent -- from Rs 15,000 per square feet to Rs 7,000 per square feet -- over the last two years,'' says Sanjay Khanna, Partner, Kailash Nath and Associates, aconstruction company. Rents have dipped by 20 to 50 per cent over the last two years.

Dinesh Chandiok, Managing Director SAARC Countries, CB Richard Ellis, a US $ 1 billion global real estate consultancy, feels that the real estate business is in a state of transition. The boom, to a great extent, was brought about by speculators. ``Two years ago, the music stopped,'' he says. ``At present, there is no money in the market and sales are being done by the end-users themselves.'' And the end-users have shrunk because of the overall economic slowdown.

``In the long run, this is a healthy trend. Though in the short run, developers are in a lurch,'' he adds.

According to the latest report issued by LaSalle Partners (India) Private Limited, Mumbai's central business district (Nariman Point) is restrained due to lack of demand stimulus with corporate relocation out of the CBD to the suburbs. Delhi CBD is subdued due to excess supply of quality space. Bangalore CBD (M.G. Road) is yet to fully absorb theexisting oversupply.In Delhi, several companies, especially MNCs, have moved their offices to South Delhi, Gurgaon, Faridabad and Ghaziabad. ``Companies are leaving cities for better quality of space,'' says Khanna. Most buildings in Connaught Place, for instance, have antiquated designs and are plagued by power and parking problems. ``Since most decision-makers live in South Delhi, they prefer to have their houses close to their offices,'' says Khanna.

The spurt of commercial offices in residential, industrial and institutional areas of the Capital has exacerbated the supply situation.

The high cost of land in the Capital is also linked to red-tapism. ``Twenty-eight approvals are required for a construction proposal in Connaught Place,'' says Chandiok. This not only results in wastage of precious time and cost escalation but also gives an impetus to payments under the table. ``I don't see why there isn't a single window clearance for construction proposals,'' he adds.

On the flip side, this hasencouraged MNCs to look southwards. ``Governments in southern states are more helpful,'' says Arjun Dosaj, General Manager, Business Development, Paharpur Business Centre. ``Above that, skilled and literate manpower is available there,'' he adds. Echoes Chandiok: ``There is healthy competition among states to attract investments. Maharashtra, Karnataka, Andhra Pradesh and Gujarat are almost marginalising the Centre. And MNCs, in turn, now have 10 states to choose from.

However, the market slump has had a positive impact on loan disbursements by housing finance companies (HFCs). ``The 26 approved HFCs under the National Housing Bank (NHB) disbursed 33 per cent more loans in the first quarter of the current fiscal as compared to the loans disbursed in the corresponding period last year,'' says P. P. Vora, Chairman and Managing Director, NHB.In 1997-98, these HFCs disbursed loans to the tune of Rs 5,775 crore, as compared to loans worth Rs 4,334 crore disbursed during 1996-97. And this year, the HFCs areexpected to disburse loans worth Rs 7,500 crore.

``The fiscal concessions on principal and interest payments on housing loans given in this year's Union Budget have also given an impetus to housing finance,'' he adds.

As per the HDFC annual report 1997-98, loan disbursements during the FY rose by 31 per cent, from Rs 2,100.78 crore in 1996-97 to Rs 2,753.61. Loan approvals during the year were in respect of 1,31,000 housing units.

The industry is banking on miracles for a turnaround. ``The scenario can change if India signs the CTBT or if a majority government assumes power and business develops faith in the Centre,'' says Dosaj.

According to Dosaj, the timing of the nuclear tests was all wrong. ``America works on a July to June financial year. So US-based MNCs completely wrote off India in terms of investments. Nothing concrete will happen till June-July 1999,'' he adds. At present, demand is mostly coming from software companies. ``If the government opens up the insurance sector, the demand will goup,'' says Dosaj.

``The government must make sure financing becomes easier,'' says Chandiok adding that the cost of finance, at present, is very high, sans any substantial tax relief on the loan taken. And the big question, according to Chandiok, is whether Jethmalani can bring about the reforms he has promised to undertake.

``Yashwant Sinha missed a tremendous opportunity by not opening up the sector. In every country, housing leads the economy. In India, steel and cement industries are in the red,'' he adds.

The present oversupply in the market will be further aggravated once the ULCRA of 1976 is repealed. It is likely to release over 2,50,000 hectares of prime land in various metropolitan cities. Though the investors will have a wider range of investment alternatives. The panacea, therefore, has to come from the demand side, insofar as CBDs are concerned. For that, what the country needs is a stable government at the Centre. Only that would attract investments and push the real estate market curveupwards.