A fight is brewing between two of China's biggest property developers as they wrestle for control of a prime commercial real-estate site in the heart of Shanghai.

Beijing-based Soho China Ltd. and Shanghai's Fosun International Ltd. signaled they may square off in court as a property market downturn forces weaker players to sell off prime properties to raise cash—and in turn serves up bargains for those companies with deeper pockets.

Soho set the stage for the battle on Thursday when it announced it was paying four billion yuan, or US$632 million, to buy 50% of a Shanghai commercial project from two struggling developers who were partners with Soho rival Fosun on the project.

On Friday Fosun fired back, saying it was surprised by the deal and was consulting its lawyers. Fosun owns the remaining 50% and said it had the right to buy the rest.

"Fosun believes that it has the first right to buy (the stake) in the proposed transfer," the company said in a statement. "The company shall take all appropriate legal actions to defend its interests."

A spokeswoman for Soho China said the firm wasn't ready to comment on Fosun's statement yet.

One company that had agreed to sell its interest in the site—Greentown China Holdings Ltd. of Hangzhou—signaled it was worried about a potential legal battle.

"We are consulting our lawyers as well. The disposal fulfills legal obligations and the transaction is likely to progress," said a company spokeswoman.

Fosun may have had other reasons to be irked by the sudden public announcement of the sale to Soho. It has a stake in another company that was involved in the transaction—Shanghai Zendai Property Ltd.—which was selling its interest in the property to Soho China. Shanghai Zendai couldn't immediately be reached for comment.

The site in dispute—which covers 45,472 square meters—is located south of Shanghai's prestigious Bund area along the Huangpu river that cuts through the heart of mainland China's financial capital. It is zoned for retail and office space. Zendai bought the site in February 2010, paying 9.22 billion yuan as the property market was still climbing.

But Beijing has been actively trying to wrestle property prices lower, and ward off potential social unrest. It has clamped down on credit to developers, tightened mortgage requirements and restricted home purchases. That campaign has begun to show results and smaller players like Zendai and Greentown have been squeezed.

Zendai announced a reshuffle of the ownership of the site in November, bringing in Fosun and Greentown. It raised 9.57 billion yuan in the deal but used most of that to repay bank loans. But Greentown has been grappling with problems of its own, having to deny rumors last month that it might be on the verge of bankruptcy.

Investors were disappointed in the price that Greentown was getting for its 10% stake in the project and they sent the company's shares 1.5% lower on the Hong Kong stock exchange on Thursday. Its shares lost another 0.3% on Friday, ending trade at 3.37 Hong Kong dollars, or 43 U.S. cents.

Zendai's shares were suspended from trade on Thursday and didn't resume trading on Friday.

Soho China's stock gained 1.0% to HK$5.17 while Fosun added 0.2% to HK$4.06.