THE rate of investment growth in real estate in India is declining, if the steadily widening gap between sanctions and disbursements of the Housing Development Finance Corporation (HDFC) is any indication. HDFC is the country's premier company providing housing loans to individuals. The loans range from a low of 25,000 rupees (HK$5,250) to a maximum of three million rupees, with larger amounts going to the building and construction industry. The number of people approaching HDFC for loans has dropped over the last six months and figures from the government stamp duty office indicate that very little fresh property is changing hands. 'We have been watching the disbursements-sanctions ratio dropping steadily over the last two years,' said Satish Mehta, operations manager with HDFC. 'It has dropped from 86.8 per cent in 1993-94 to 81.1 per cent in 1994-95; and for the first nine months of 1995-96, it was down still further at 77.4 per cent.' Disbursement depends on the actual demand from builders for funds as a project progresses. Due to tight liquidity conditions over the last six months, real estate-related construction work has slowed down. While HDFC's santions-to-disbursements ratio has dropped in percentage terms, both sanctions and disbursements have grown in real terms. Sanctions were up from 10.25 billion rupees in 1993-94 to 14.95 billion rupees in 1994-95. For the nine months ended December 31, 1995, they stood at 15.04 billion rupees. Similarly, disbursements rose from 8.89 billion rupees in 1993-94 to 12.12 billion rupees in 1994-95, and to 11.64 billion rupees in the first nine months of 1995-96. The recent slump in real estate investments appears to be concentrated in the western region of the country, primarily the twin cities of Bombay and New Bombay (or Mumbai and Navi Mumbai, as they are now officially known); and Bangalore, capital of the southern state of Karnataka. 'We anticipate that there could be a further fall in property prices in the twin cities,' said Deepak Parikh, chairman of HDFC. 'Paradoxically, though, construction activity itself has seen a major boom in the last three years.' Mr Parikh claimed the slowdown in disbursements had not adversely affected HDFC and most other housing finance companies because the number of builders and projects has increased, and several corporates have entered the real estate field in the late-1980s and early-1990s. 'The property market itself has grown tremendously; and by the time 1995-96 is out, we expect sanctions to touch 20 billion rupees and disbursements to be around 16 billion rupees,' he said. 'But prices have experienced a slump of late, mainly because they had touched unrealistic levels by mid-1995.' While the Bombay and Bangalore real estate markets are down, the property markets in Hyderabad, Madras, Cochin, New Delhi and Calcutta continue to do well, claimed other industry sources. 'We feel that the time is ripe for real estate buyers and investors to take advantage of the lower prices,' said noted builder Niranjan Hiranandani of Hiranandani Constructions. Investors are of the opinion that prices will come down further, and are playing a wait-and-see game. The hiking of HDFC's interest rates on housing loans, from 15.5 per cent to 17.5 per cent, has also forced investors away.