Clouds are gathering over the real estate market as property developers experience financing strains.

The operating net cash flow of the 84 listed Chinese property developers had stood at -70.59 billion yuan (-$10.79 billion) by the end of 2010, decreasing by 115 billion yuan ($17.7 billion) from that in 2009, according to data from the Wind Information Co. Ltd.

As the domestic monetary environment tightens and home sales nose-dive, the developers are coming under growing financial pressure to lower prices, said Yang Hongxu, a senior analyst with the E-house China Research and Development Institute.

Since 2010, the People's Bank of China, the central bank, has raised interest rates four times and hiked the ratio of deposits commercial banks must set aside in reserve nine times.

"The balance sheet of China's property developers will become tighter as most of them rely heavily on sales proceeds to service large land payments," said Zhuang Jian, an economist with the Asian Development Bank, China Office.

"Financing of developers is a key factor to impact house prices," said Chen Zhi, Deputy Secretary General of Beijing Real Estate Association. "An encouraging sign is many developers are offering discounts to lure buyers."

In search of a source of capital, many property companies are looking beyond China's borders. Chinese developers have raised more than $3 billion in overseas bond markets, said the credit rating agency Standard & Poor (S&P).

Bond sales could only temporarily improve liquidity, and aggressive developers that have relied on borrowing to fund growth could be at risk as measures to cool the housing market start to bite, it said.

"Rising leverage and volatility in the real estate market are a risky combination for developers," said S&P credit analyst Bei Fu, "The companies' liquidity could come under pressure if transaction volumes or average selling prices dramatically drop."

Those developers that have acquired expensive land at the peak of the market cycle are particularly vulnerable, said Fu.