HONG KONG (Reuters) - Property developer China Overseas Land & Investment (COLI) (HK:0688) said on Friday that local authorities had blocked sales at one of its projects in the city of Shenzhen for administrative reasons, and this would not have any impact on its finances or operations.
Around 2,900 units at a residential project owned by COLI called Yuejing Garden have been blocked from pre-sale, the website of Shenzhen's Urban Planning Land and Resources Commission shows.
However COLI said in a statement that this blockage was not due to it failing to comply with legal requirements and that it had in fact already sold all of the units.
COLI shares fell as much as 7 percent when news of the blockage first spread due to fears it may be suffering similar problems to embattled property firm Kaisa Group (HK:1638), which has been blocked from selling units at its projects in Shenzhen.
However the stock eased some of those losses, trading down 2.4 percent at 0701 GMT after the state-owned developer issued a clarification.
"To the best knowledge of the board, the temporary suspension of sale of the property was due to normal administrative measures and procedures adopted by the relevant land authority," COLI said in a statement.
"All the units in the property have been sold and delivered to the buyers," it added.
Chinese property developers are struggling against a credit crunch and excess supply, which have tempered hopes that real estate could provide a boost to the economy. Late last year, the government put in place a series of stimulus measures to spur property buying but inventory remains high.
COLI's project is located in Longgang district in the northern part of Shenzhen, where two of Kaisa's projects have also been blocked.
Kaisa has also come under scrutiny after a string of senior executives left unexpectedly. Its shares have been suspended and investors are concerned that if the company was wound up, they would struggle to stake a claim on the company's assets in mainland China.