High interest rates regime and economic slowdown, coupled with the ripple effect of the US subprime crisis cooled off the overheated realty sector to some extent, forcing developers to adopt cost-cutting measures, such as deferment of projects, salary cuts and layoff of employees.

Developers, big or small, faced huge liquidity crunch as both end-users and investors shied away from the market. The sector's woes got further accentuated from the kind of battering it received at the stock market, with its sharp price falling like ninepins.

In a year when everything went wrong for the industry, Unitech's stake sale to Telenor in its telecom venture and the country's biggest land deal by BPTP made headlines.

The fall in sales volume was so sharp that turnover and profit of almost all the companies started to decline from the first quarter of 2008, which became more pronounced as the year progressed.

"In 2008, the Indian realty sector took an unprecedented body blow. There has already been an overall drop of demand to the tune of 45-50 per cent," real estate consultant Jones Lang LaSalle Meghraj chairman and country head Anuj Puri said.

He pointed out that the prices of residential units fell by an average of 15-20 per cent across the country and said similar trend was witnessed in rentals for retail spaces.

The slump in demand forced developers to offer discounts and freebies to boost sales. But that did not help and the industry, which was in a denial mode in the first part of the year, started talking about problems and sought government's helping hand to come out of the trouble.

The Centre did not disappoint the industry and announced lower interest rates for home loans up to Rs 20 lakh, which prompted the developers to focus on affordable housing.

It was all well till the end of the last year and realty majors like DLF, Unitech and Emaar MGF were all set to raise huge capital from domestic and overseas markets in 2008 to fund their massive expansion plans.

But the mood changed within a few months when Emaar MGF had to withdraw its maiden public offer of over Rs 7,000 crore (Rs 70 billion) in February because of bad market condition.

On seeing the fate of Emaar MGF's IPO, many other realty firms decided not to try their luck in the capital market. The development was in complete contrast to 2007 when the sector emerged among the top fund-raiser with DLF leading the chart at over Rs 9,000 crore (Rs 90 billion).

The realty index on the Bombay Stock Exchange fell by over 82.49 per cent at 2,283.52 points on December 30 compared to 13,037.89 points on January 1 this year. Unitech seemed to be the biggest loser with its scrip currently trading over 92 per cent down since the beginning of the year.

The shares of DLF, IndiaBulls [Get Quote], HDIL, Sobha Developers [Get Quote], Omaxe and Parsvnath also crashed between 73 per cent and 90 per cent on the BSE during the review period.

The crash in the global stock market also forced the country's two largest real estate firms, DLF and Unitech, to defer their public offer in Singapore indefinitely.

Amid these bad news came the shocker when Delhi-based BPTP outbid real estate giant DLF to bag a 95-acre commercial plot in Noida for a whopping Rs 5,006 crore (R 50.06 billion) in March, making it the country's biggest land deal, though it is a different matter that the company is facing difficulties in raising funds for making payments to the Noida Authority.

Another major development was Unitech getting the licence to launch mobile services and then selling majority stake in its telecom operation to Norway's Telenor for Rs 6,120 (Rs 61.20 billion) crore.

Even though the developers bore the brunt of slowdown with falling sales and declining profits, they did not shy away from announcing projects with huge investments.

Among the big-ticket announcements made during the year, Parsvnath said it would invest Rs 60,000 crore (Rs 600 billion) in the next five years in diversified areas like SEZs, airports, express ways and retails business, while Ansal API made public its intention to pump in Rs 13,000 crore (Rs 130 billion) to develop a huge township spread over 2,500 acres adjoining Greater Noida.

Meanwhile, Israel-based BIG Shopping Centres entered into India's organised retail market with plans to develop 60 malls across the country in the next 10 years at an investment of $2.4 billion (over Rs 11,000 crore).

Facing the heat, the major developers, including DLF and Unitech, which till last year were focusing on luxury housing, diversified their product portfolio to affordable housing.

DLF announced to invest Rs 15,000 crore (Rs 150 billion) to develop 40,000 units, while Unitech said it would build 10,000 apartments at an investment of Rs 2,500 crore over the next few years. They would offer these housing units in the range of Rs 15-50 lakh.

Shocking everyone, Omaxe announced a mammoth investment of Rs 80,000 crore in the next five years to build 10 lakh housing units, which the developer has planned to offer at Rs 3 lakh to Rs 15 lakh.

But for the developers, it was not only big bang with such announcements, but also had to hide their faces as they resorted to firing people and cutting salaries of the employees to deal with financial crisis.

DLF had reportedly fired 600 employees, while Unitech laid off 10 per cent of its total 1,700 staff. Parsvnath and Omaxe cut salaries of their staff up to 20 per cent and 10 per cent, respectively. Omaxe also downsized its staff strength by 70 people.

Not being able to generate funds, the developers also had to put on hold projects involving big investments or slow down the construction work.

Better late than never, the government came to the rescue of the industry and asked the public sector banks to announce cheaper home loans up to Rs 20 lakh. The four per cent cut in CENVAT also gave a sigh of relief as it would lead to lowering of input costs.

However, realty consultants are of the view that the recent measures taken by the government would bear fruit in the sector only if it is complemented with lowered property prices and further injection of liquidity.

Realising the impact of slowdown in the housing sector on other industries, like cement and steel, and its employment generation capacity, the government is mulling another package to boost the sector, expected to be announced in the new year.

Hopefully, the second stimulus package will bring smile to the common man and provide much-needed relief to the real estate sector.