High prices in Mumbai's property market are even holding back Bollywood stars from buying homes.
Up until a year ago, Rashid Bastvi, a property broker, enjoyed a thriving business selling luxury homes to Mumbai's super-wealthy, as they snapped up properties in India's commercial capital. Today, the picture is not so rosy.
"Even celebrities are not buying property," said Mr Bastvi, who counts Pooja Bedi and other Bollywood stars among his clients. "Mostly celebrities and diamond merchants wanted big properties if you go back over a year ago."
The slowdown in business has taken its toll on the operations of his company, Bastvi Estate.
"More than six months ago I had three offices, but I shut two offices," said Mr Bastvi. "The market was very good, but right now it's in very bad condition. Now the market is so slow for luxury."
He blames the decline in demand on sky-high prices, which stem from soaring land, borrowing and construction costs and government regulations, coupled with weaker sentiment surrounding India's economy.
"The Mumbai real estate market has stagnated," says Samantak Das, the director of research and advisory services at Knight Frank in Mumbai.
"Absorption numbers in [the financial year] 2012 are estimated to have dropped by more than 60 per cent from its 2007 heydays and 35 per cent from 2011," according to a report issued by Knight Frank over the summer.
"The stagnant real estate prices today suggest a stalemate between buyers and sellers," adds Mr Das. Buyers have been waiting for a drop in price levels to materialise before returning to the market, he says.
House prices have doubled in Mumbai over the past few years, according to industry estimates. Homes in areas such as the upmarket Malabar Hill area of Mumbai are typically priced at between 60,000 (Dh4,172) and 70,000 rupees per square foot, according to Knight Frank.
"This steep drop in absorption levels should have resulted in a similar correction in prices," says Mr Das. "A regulator imposed supply crunch through delay in approvals ensured that market equilibrium was maintained.
"Thus, an even greater fall in units launched effectively offset the impact on prices. Rising interest and other input costs such as land and labour in addition to the ever increasing raw material costs like cement and steel have constrained developers from cutting prices."
In particular, South Mumbai, where land is scarce and property prices are high because it is considered to be the heart of the city and a desirable place to live, is suffering because of the current market conditions.
"Overall, the Mumbai luxury residential market has been rather slack over the past few months," says Om Ahuja, the chief executive of residential services at Jones Lang LaSalle India. "The traditional luxury homes nexus of South Mumbai has seen a dip in demand. Over the past few months, prices have not seen any movement."
About half of the homes launched in South Mumbai remain unsold, according to research by eyestate in March, a property database in India.
Customers would only start buying property once prices come down, brokers argued.
"The demand from local people is at zero," says Yashwant Dalal, the president of the Estate Agents Association of India. "They don't have the money to buy at such an escalated price. It's too expensive. I think prices are unrealistic."
Many local property agents were struggling as a result, he explains.
"The estate agents are suffering because there's no deal. Sixty per cent of the people who have rented commercial offices have vacated the premises and started doing business from their house," he says.
Major luxury developments in Mumbai include the 20 billion rupees World One project, the interiors of which are designed by Giorgio Armani. This is expected to be one of the tallest residential towers in the world.
A Trump Tower project was announced for Mumbai last year, but the status of the project was not clear after it suffered regulatory hurdles.
Developers argued that prices in the market simply reflect their high development costs.
"Even if one tries to, one cannot bring the cost down," says Bharat Dhuppar, the chief marketing officer at Omkar, a luxury developer based in Mumbai. "That is the situation we are in right now. The land is so high in price. Mumbai has gone slightly expensive. There is no doubt about it. The second option could be that I could make non-luxurious [homes] but non-luxurious would not make too much of a difference in my costing because the major portion of costing is in the land."
Supply and demand are fairly equally matched in the market, Mr Dhuppar said.
"Real estate has always at any given point been a stretch buy for anybody, and it is the same story today, so it has not much changed."
More projects have started being approved, analysts said, which should in theory help bring down prices as supply increases. A wave of launches are expected for the festive season this month. But challenges remain.
"Project approvals that were practically stalled in 2011, have started coming through again as the development control regulations were amended early this year," says Mr Das . "However, demand is likely to remain subdued due to the prevailing uncertainty in the economy."
Mr Bastvi said he can only hope that the situation would improve enough to allow him to relaunch a second office next year.