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Liquidity Crisis Could Benefit Large Real Estate Developers

By PropertyGeld Editorial Team

Published on PropertyGeld: 5 Oct 2026

How the Liquidity Crisis Could Help Organised Developers

India's real estate sector was facing a liquidity shortage in 2018, creating challenges for developers who depended heavily on external financing.

However, the situation could have an unexpected advantage for large, financially stronger and organised developers. With smaller or highly leveraged builders facing greater financial pressure, established companies with healthier balance sheets could potentially increase their market share and acquire attractive assets at better valuations.

Large Developers Could Gain Market Share

The credit shortage was expected to accelerate a trend that was already visible in the residential property market.

Organised and listed developers had gradually increased their share of the market following major regulatory changes such as:

• Demonetisation

• Real Estate (Regulation and Development) Act, or RERA

• Goods and Services Tax (GST)

According to the 2018 analysis, the developers covered by the research had increased their combined market share to 39.2% by June 2018, compared with 21.1% in June 2017.

Most Unsold Properties Were Still Under Construction

One important factor that could limit the impact of the liquidity crisis was the relatively small amount of completed inventory.

Across the three major markets studied — MMR, NCR and Bengaluru — about 13% of total inventory, or 75 million sq ft, was completed, while approximately 87% remained under construction.

This meant that distressed developers had fewer completed properties available for immediate sale, potentially reducing the pressure on property prices of financially stronger developers.

NCR Had Large Under-Construction Inventory

The National Capital Region had around 238 million sq ft of total outstanding inventory, including approximately 23 million sq ft of completed stock.

Around 80% of the NCR's under-construction inventory was concentrated in Noida and Gurugram, making these two markets particularly important in the region's overall residential inventory situation.

Based on the sales pace at that time, completed NCR inventory was estimated to take around six months to sell if no additional stock entered the market.

NCR Inventory Breakdown

The research covered several major NCR markets:

These figures relate to the inventory position in August 2018, not today's market.

Mumbai Metropolitan Region Had the Largest Inventory

The Mumbai Metropolitan Region (MMR) had the highest total inventory among the three major markets studied.

Its overall inventory stood at approximately 292 million sq ft, including around 30 million sq ft of completed stock.

A large portion of the region's inventory was concentrated in Thane, which accounted for roughly half of the MMR's overall stock.

Bengaluru Had Lower Completed Inventory

Bengaluru had approximately 163 million sq ft of total inventory, of which around 21 million sq ft was completed.

At the prevailing sales rate, the completed stock was estimated to represent roughly five months of inventory, assuming no new projects were launched during the period.

Financial Strength Became More Important

The liquidity shortage highlighted the importance of strong financial positions among property developers.

Companies with lower debt, stronger cash flows and healthy sales could potentially withstand a prolonged downturn better than highly leveraged companies.

The research also suggested that financially stable developers could use the difficult market environment as an opportunity to acquire land and other assets from stressed companies.

Strong Balance Sheets Could Provide an Advantage

Established developers with relatively liquid balance sheets were considered better positioned to deal with financing pressures.

The report highlighted companies such as Oberoi Realty and Sunteck Realty as examples of developers with relatively low net debt-to-equity ratios at that time.

The broader point was that companies with lower financial leverage had greater flexibility during a period of restricted credit.

Inventory Concentrated Among Large Players

Across the three major markets, around 65% of total inventory belonged to the top 50 developers, while the remaining 35% was held by a larger group of smaller developers.

NCR stood out because approximately 85% of its unsold inventory was held by large players, compared with around 54% in Mumbai and 51% in Bengaluru.

What This Meant for the Real Estate Industry

The liquidity crisis created significant challenges for India's property sector, but it also had the potential to accelerate consolidation.

Smaller developers facing funding difficulties could lose market share, while financially stronger companies could benefit from:

• Greater buyer confidence

• Access to capital

• Acquisition opportunities

• Distressed land purchases

• Increased market share

• Better ability to complete projects

This could gradually make the real estate industry more organised.

Conclusion

The 2018 liquidity crisis was expected to create pressure across India's real estate sector, but large and financially stable developers were comparatively better positioned to withstand the situation.

The NCR, Mumbai Metropolitan Region and Bengaluru were the three major markets examined in the analysis. Within NCR, Gurugram and Noida were particularly important because they held a substantial portion of the region's under-construction inventory.

The overall trend suggested that periods of financial stress could accelerate consolidation, allowing well-capitalised developers to strengthen their position while weaker players faced greater challenges.

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