Chinese authorities have lifted a sales blockage on most apartments built by Kaisa Group Holdings Ltd, removing a key hurdle to the proposed sale of the troubled developer to larger peer Sunac China Holdings Ltd.

Shenzhen city blocked sales at around 10 developments in December for undisclosed reasons, leaving Kaisa struggling to repay $2.5 billion in debt. Sunac set removal of the block, as well as restructuring of the debt, as conditions for a takeover.

The website of Shenzhen's Urban Planning Land and Resources Commission showed the status of some apartments as "frozen by the court" rather than "blocked by authorities." Others, many of which were in the process of being sold when the block was imposed, were marked as "sold and registered."

The Commission was not immediately reachable for comment.

"It's a good sign in that it's a step forward - but not completely unlocked as it is in a judicial process," said Nomura credit analyst Annisa Lee. "While pre-sales are still suspended, the latest move means onshore creditors can potentially claim the assets unlike before when the projects were blocked."

Onshore creditors could recoup money owed by asking the court to liquidate frozen assets. Offshore creditors, however, would only be able to recoup money from Kaisa, which would need to sell the assets to raise funds.

In March, Sunac Chairman Sun Hongbin said lifting the block would not alone be of much help because Kaisa offered its assets as collateral to banks. Kaisa would therefore also need to restructure its debt, which creditors have so far resisted.

A Kaisa spokesman said he had not heard from the authorities of the block being lifted and was unsure of the significance of the change in status.