Though Beijing cut the interest rate on Thursday, property analysts say the disposal plans will continue.

Greentown, based in Hangzhou, announced yesterday it would sell a total of HK$5.1 billion of shares and convertible securities to Hong Kong's Wharf (Holdings).

The Hong Kong developer will hold 24.6 per cent of Greentown and become the second-largest shareholder. If the company converts the notes, its shareholding will increase to 35.1 per cent.

It is Wharf's largest investment on the mainland since it spent 6.3 billion yuan (HK$7.7 billion) to buy two sites in Hangzhou and Hunan in February last year.

Greentown will offer 327 million new shares at HK$5.20 - a 2.8 per cent discount to the closing price at HK$5.35 on Thursday - and also issue HK$2.55 billion of convertible notes with a distribution rate of 9 per cent.

Alan Chiang Sheung-lai, head of mainland residential property at property agency DTZ, said: 'Poor property sales and tightened lending have forced many mainland developers to sell their assets to repay debts, but this is the first time a large developer has sold a major portion of their shares.'

DTZ's research shows 22 out of the top 30 developers listed in Shenzhen and Shanghai recorded negative cash flow in the last quarter of 2011. The gearing ratio of 13 developers was over 70 per cent. Many small and medium-sized developers are now facing financial problems as lenders like China Construction Bank have cut off funding.

The drop in interest rates has done little to help the property market, although developers may be able to raise their asking prices slightly.

'Developers were reluctant to sell their sites to other companies when the property market was booming previously, as they could fetch higher prices by selling the projects to individual buyers,' Chiang said.

'However, with property sales in recent years weak, they have become willing to sell.'

This was providing many opportunities for overseas and local developers to expand into the mainland at a discount and at a faster pace.

With this acquisition, Wharf surpassed New World China to become the Hong Kong developer with the largest land bank on the mainland.

Wharf owned 12.2 million square metres by the end of last year, while Greentown held 40.98 million. New World China owned a land bank of 18 million square metres.

However, such company transactions are not expected to become a trend, analysts said.

Chiang said: 'There are some small developers who are selling their shares. But not many companies are interested in buying, as the developers are small. And the investment risk on buying companies is higher than a single project.'

The gearing ratio of Greentown was 216 per cent at the end of last year, indicating an excessive degree of borrowing.

Greentown chairman Song Weiping said: 'We have experienced cooling measures [in the property market] for half year or a year.

'But the duration of the current cooling measures is much longer than we expected. We are in a very difficult situation.'

The amount raised will be used to repay loans and for working capital.