PROPERTY developer China Enterprise Co Ltd plans to sell a building it acquired two years ago to Shanghai Industrial Investment (Holdings) Co Ltd for 870 million yuan (US$122 million).

The company said the transaction, still pending government approval, will help it speed up cash collection for future sustainable growth, according to the Shanghai Stock Exchange.

The office building in downtown Jing'an District is scheduled to complete construction this year, with a total gross floor area of more than 28,700 square meters. China Enterprise bought the building for 540 million yuan in October 2006.

The company recently announced a plan to invest about five billion yuan to develop high-end houses - mainly villas - in Nanhui District.

China's real estate developers have faced tough conditions since the central government introduced policies to cool the property market, including tightening credit. Many companies, especially smaller ones, are finding themselves cash-strapped as sales of new homes have dropped across the country in the past few months.

In Shanghai, sales of new homes dropped for the fifth consecutive month in February to 721,000 square meters, or 7,426 units, down more than 50 percent from January, Shanghai Securities News reported yesterday.

China Enterprise is not alone in seeking capital. Last month, China Vanke Co, the country's largest publicly traded developer, said it will set aside up to 980 million yuan to supplement current capital and reduce financial costs.

The Shenzhen-based company also conducted massive sales promotions in cities including Shenzhen, Guangzhou, Chengdu, Shanghai and Beijing.

Liquidity could dry up if market conditions do not improve, and many smaller developers will not survive the harsh operating conditions, a Standard & Poor's report said recently.