"Many developers are rationalising prices across the country, and certain sets of people are saying there's a need to focus more on either the luxury or the mass market."

Since India eased rules on inward property investment in early 2005, the country has swept into a dusty frenzy of construction, causing land prices to double in major cities.

Drawn by a thriving, 1.1 billion-person economy, where a new batch of graduates swarm out of technology parks eager to shop and go home to modern apartments, global property investors such as Citigroup and Morgan Stanley have rushed in.

A raft of developers such as DLF Ltd and Parsvnath Developers Ltd have listed on the Mumbai stock market to raise funds for expansion drives. Annual property investment is projected to double to $90 billion by 2010.

But a drop of around 20 percent in residential transactions since January -- as rising interest rates and soaring prices put India's new rich off buying -- has persuaded many developers to take a second look at their business models.

Prices have fallen 15-20 percent in New Delhi and Punjab, and have paused in Mumbai after sharp rises.