Bombay's real estate prices show no signs of reviving, even after 18 months of near-continuous decline have eroded the value of both residential and commercial premises by 25 to 50 per cent. Property pundits who predicted an uptrend by the end of last year have had to eat their words. They now say the sluggishness will remain until the end of the first quarter of this year. 'In a way, the downswing is not surprising, since prices had gone crazy between 1992 and early 1995,' said Pramod Sahgal, a prominent real estate agent in the metropolis' central business district. 'This is a technical correction.' The prolonged tailspin has caught both brokers and real estate developers by surprise. Even Colliers Jardine Property Services, a division of the Hong Kong-based Jardine group, which tracks all-India property prices and which had predicted a turnaround by the end of last year, has revised its projections. 'A revival is expected to take place in the second quarter of 1997. Thereafter, the market is expected to grow at 7 to 10 per cent,' Colliers Jardine said. 'That cannot be considered any growth, since it is equivalent to the prevailing rate of inflation,' scoffed G. C. Garg, president of Lloyds Finance Limited, part of the Lloyds Steel group, which has strong interests in property development. Perhaps the most disturbing feature of the Bombay real estate market is the drop-off in transactions. This indicates that buyers are waiting for prices to drop further, while sellers are hoping for a better rate. Investors who had purchased property for resale have been hit hard, since they are unable to recover their investment, let alone the interim interest loss. Commercial property prices in South Bombay's central business district have decreased by at least 30 per cent over the last year, with the fall more marked in certain localities. In trendy Nariman Point, average prices have dropped from 25,000 rupees (about HK$5,512) per square foot to 15,000 to 18,000 rupees per sq ft. Rates for commercial property in Marine Lines and the Flora Fountain area, near the Bombay Stock Exchange, have gone down by about 35 per cent - from 13,000 to 9,000 rupees per sq ft. In the residential-commercial Prabhadevi and Dadar areas, prices have gone from 14,000 to 9,000 rupees per sq ft. In the western suburbs, where transactions at least are still occurring, the fall has been less pronounced. In Bandra and Khar, prices are 7,000 rupees per sq ft compared with 9,000 rupees a year ago. A few builders maintain that the depressed prices are not continuing into 1997. Niranjan Hiranandani, a prominent builder who has built a massive residential complex around Powai Lake in Vikhroli, said prices in the area have stabilised over the last few months at 4,000 rupees per sq ft. 'It is also significant that transactions have risen sharply, from almost nothing up until November, to 300 flats during December,' he claimed. Real estate developers said the downward price trend has also been noticeable in the Navi Mumbai (New Bombay) area. Rates have come down from 1,700 rupees per sq ft to 1,500 rupees per sq ft over the last year. 'It is basically the liquidity crunch that has caused the dramatic fall in prices,' said L. C. Gandhi, chief of the Lok Group, a major development firm. 'It has put a stop to all the speculative activity that had earlier pushed up prices.' Another developer attributed the slide downtrend to the political instability in Maharashtra state, and the massive extortion that the building industry faces at every level. Concluded M. R. Pai, chief of the Forum of Free Enterprise, 'The silver lining in all this is that the main buyers are end-users, and not mere investors.'