Only two property companies bid for the National Textile Corporation's Finlay Mill land in Central Mumbai, indicating prolonged slowdown in the property market and negative investor sentiment in real estate, said an informed course.

The bids were also below the reserve price, indicating lack of sufficient interest for the 10.3 acre plot among the potential bidders, the person said. The bidders -- Indiabulls [Get Quote] and Lodha -- bid Rs 520 crore (Rs 5.2 billion) and Rs 657 crore (Rs 6.57 billion), respectively, as against the reserve price of Rs 708 crore (Rs 7.08 billion).

According to sources, NTC has accepted the bids and would take it to its asset sale committee, which will review these. The committee is expected to tell the bidders to increase the bid or select the bidder based on the highest price by next week, they said.

NTC has put the land on sale for the third time, as it did not get enough response from bidders on the first two occasions. As many as 20 potential bidders such as Reliance [Get Quote] Vornado, Tata Realty, DB Realty and Kalpataru evinced interest in the land, but only Lodha and Indiabulls put in their bids today, with Rs 100 crore (Rs 1 billion) earnest money.

"A lot of bidders were half hearted about buying the land. A lot of them showed interest but most of them felt it is too early to enter the market. The majority of them are in fund raising mode and the bid amount was too high for many,'' said a developer, who did not wish to be quoted.

He also said the earnest money was very high and the bid could have attracted more bidders if NTC would have extended the process by a fortnight. "Markets are still in bad shape and developers do not have money to honour their present commitments. How can you expect them to bid for new projects?'' asked a leading property consultant.

NTC chairman K Ramachandran Pillai could not be contacted for comments. Property prices have fallen over 30 per cent and transactions have dried up in Mumbai since their peak in 2007-08, as the economic downturn forced home buyers and corporates and financial institutions to defer new buys.

To tackle the downturn, property developers have launched so-called affordable housing projects, which are 20-30 per cent lower than market prices.

Last year, the Mumbai Metropolitan Region Development Authority failed to get bids for two of the five plots that it auctioned in the Bandra-Kurla Complex, Mumbai's secondary business district, as developers stayed away from buying high priced plots.

Reflecting the lower demand from corporates and institutions, rents have crashed in the city's business districts. Rents in Nariman Point, the central business district, have halved from their earlier levels of Rs 500 per sq ft per month and Bandra Kurla Complex rents have also come down to Rs 200 a sq ft from Rs 400-Rs 450 earlier.