Realty developers face liquidity crunch: Crisil

Many such developers have stretched themselves operationally, and borrowed heavily, to benefit from the real estate upturn of the past three years. "The current slowdown in demand for realty, coupled with declining internal accruals and reduced funding options, exposes them to the downside of this aggressive strategy: there are large amounts of debt already on their balance sheets, and external funds are increasingly hard to come by," Crisil has said in its latest report.

It foresees delays in many ongoing and planned real estate projects, thereby leading to the possibility of sale of projects or even enterprises. Increasing real estate prices over the past three to four years resulted in a large number of developers acquiring land at high rates in anticipation of a further increase in prices, and scaling up their operations multifold. While some developers have managed to finance this growth through a prudent debt-equity mix, most medium-sized and small developers have relied heavily on debt.

•Delays forecast in many ongoing and planned realty projects, leading to the possibility of sale of projects

•High prices over the past three to four years resulted in a large number of developers acquiring land at high rates

•Several of the scaled-up projects in danger of proving financially unviable and leading to a liquidity crunch