CENTRAL China Real Estate Ltd, part owned by Singapore's CapitaLand Ltd, may raise as much as HK$1.9 billion (US$244 million) in a Hong Kong initial public offering, said two people familiar with the sale.

The company, based in and focused on China's Henan Province, plans to sell 500 million new shares at HK$2.75 to HK$3.80 each, they said, asking not to be identified before the information is made public.

The sale will test investor demand for Chinese property stocks after two developers shelved Hong Kong IPOs this year as shares slumped and the government sought to damp real estate investments and prices. Central China announced the price range a week after the nation's most powerful earthquake in 32 years on May 12 leveled houses in Sichuan, Gansu and Shaanxi provinces.

There are "rising concerns that smaller developers are struggling to raise finance and likely to dump inventory," said Andrew Sullivan, a sales trader at Mainfirst Securities Hong Kong Ltd. "Fallout from the earthquake is likely to mean that investors are wary of mainland developers at present."

If completed, Central China's share sale would become the first Chinese property IPO in Hong Kong since Zhong An Real Estate Ltd's HK$3.6 billion offering in November, according to data compiled by Bloomberg News.

The price range values Central China at as much as US$975 million, 40 percent less than its estimated net asset value this year, based on a May 10 report by BOC International Holdings Ltd, which is helping manage the sale. Six Hong Kong-listed Chinese regional developers traded an average 31 percent below their net asset value this year, BOCI said.

Unlike most other Hong Kong-listed Chinese property firms, Central China focuses on smaller cities.

Henan's average selling price lagged 43 percent behind the national average in 2006, making it less vulnerable to government tightening, BOCI said.