Companies, mainly IT and BPO service providers and finance firms, with significant US businesses are cutting back expansion plans and, therefore, the need for prime commercial real estate.

Meanwhile, tighter liquidity at home is encouraging companies to defer their property bookings.

In the Bandra Kurla Complex, the city's second main commercial hub where rentals peaked at Rs 450 per sq ft a month, clients are now negotiating with developers at below Rs 300 per sq ft.

Rents are expected to come down to Rs 200 a sq feet when three prominent buildings are completed in six months.

In the Churchgate area of business district Nariman Point, which houses old office buildings, rentals have already settled at Rs 240-250 sq ft a month from Rs 325-350 a sq ft barely two months ago. That is a 45 per cent correction.

"Companies are not signing at the rates asked by developers like they did earlier and transactions are not taking place.

"We have seen prices correcting sharply in Nariman Point in the last one month,'' said Suketu Mody, president and chief operating officer of Coldwell Banker Goodwill Consultants, a US-based consultancy firm that advises many Indian companies on their property deals.

Image: A man gets an early morning exercise against a backdrop of a section of the city. | Photograph: Rob Elliott/AFP/Getty Images.