Property developers are expected to post disappointing results for their 2008 business year and 2009 could be even worse, the rating agency said in a report.
The outlook for the China's real estate sector remains gloomy for the remainder of 2009 given the extremely challenging global economic conditions and a large buildup of inventory last year, it added.
As the real estate market remains volatile in 2009, it will likely see more defaults among developers as many players have tight liquidity, said Fu Bei, credit analyst at Standard & Poor's.
"After a cash-burning 2008, and a good amount of financing coming due in the next 12 months, many companies lack the resources to hold on and consolidation will undoubtedly accelerate," Fu said in the report.
