"Prices in NCR have fallen by 25-30 per cent,'' said Sanjay Agarwal, a Delhi-based broker. `'Investors have withdrawn as they have seen no appreciation in prices in the last 12 months. When investors withdraw, values are bound to plummet,'' said Sanjay Dutt, CEO, Cushman & Wakefield.

"Barring Mumbai, prices have fallen 10-20 per cent, which is marginal compared to the increase in the last two years, when prices more than doubled in many cities. If you sit across the table with cash and negotiate hard, you can get an additional 15-20 per cent discount ,'' said a realty expert.

Last week, the grapevine in real estate circles was that another 100 flats have exchanged hands at 30 per cent discount although it could not be confirmed. "Developers realise clearly that in the next six months, the values will not go up. If they have lots of units to sale, it may make sense to do large deals at a discount,'' said Dutt.

For instance, a developer could sell 30 flats a month at the rate of Rs 4,000 per sq ft over five months. If he can sell 150 flats today and realise Rs 3,600 per sq ft, the net present value of this deal would be the same as selling 30 flats over five months at Rs 4,000 per sq ft.

Observers say the bulk deals also signal that builders no longer have the ability to hold onto the inventory.

Experts say the crunch is more with smaller players with limited resources. These are city-centric builders who are not financially savvy, have small profits and accruals. They lack access to financial institutions as most of the deals are not above board. Companies that have raised money through IPOs are better off.

"Builders in tier-II cities may feel the crunch more as markets such as Jaipur and Chandigarh were more investor-driven markets,'' said a Delhi-based consultant. Developers downplaying the liquidity crunch said, "It is not yet a panic situation. The free flow (of money) has been restricted,'' said Vijay Kumar of Shipra Group.

With last 2-3 years being good, developers have somehow managed to absorb the downturn. Encouraged by good profits, each builder (who were city-centric) wanted to be a pan-India player. So, they began buying land at whatever prices, which resulted in real estate prices skyrocketing across the country.

During Diwali (festive season, when many people book new flats) last year, a Mumbai-based builder had raised prices by Rs 1,000 per sq for his project in Ghatkopar, a Mumbai suburb. Since then, he has not been able to raise prices. "It's a question of who blinks first. Pressure is clearly more on the developer,'' said a real estate expert.

Prices could fall in other segments, where significant supply is being added. "For IT parks, there could be a correction of 15-40 per cent in rentals as there has been a significant build-out. In the western corridor around Pune, 35 million sq feet is being built. Developers are not finding occupiers,'' said Chakravarti.

Rising salaries and high real estate cost are also negating the cost arbitrage the IT and BPO firms enjoyed. "Many BPOs (in voice and low-end data processing) can't afford these rentals, which is forcing them to look at Eastern Europe,'' said an expert.

Faced with a liquidity crunch, developers are bracing up for more private equity investments. "Real estate developers are more forthcoming, more flexible and realistic than they were three to 12 months ago,'' said Chakravarti.

This is reflected in the financing proposals being structured. Earlier, developers wanted the entire premium for land in the beginning of the project. Now, they are ready to accept deferred premium on land valuations based on achieving certain revenue targets.

Despite the downturn, investors remain bullish on the long term potential. "The fundamentals of the story are very much in place. India is a long term growth story. Our funds are of seven-nine year tenures. We can take a bit of rough with the smooth,'' said S Srinivasan, CEO, Kotak Realty Fund.

"There's demand at the budget end of the market, in residential and for budget hotels. Even if GDP growth slows down to 6-7 per cent, there will be demand for a lot of office space,'' said another expert.

`'It's not the end of the road for real estate. This is just the beginning. In the last 12-14 months, people have got carried away. Correction is a good opportunity to bring in a more committed set of buyers, long term investors and occupiers. The boom in Indian real estate will continue for another decade,'' said Chakravarti.