Debt-riddled developers in China are turning to incentives like luxury cars as they rush to shed an inventory of unsold homes about seven times the size of Manhattan.

Hopson Development Holdings Ltd in May offered a free Porsche or discounts of as much as 11 percent to the first 30 buyers of apartments in a complex in southern China. Evergrande Real Estate Group Ltd is letting homebuyers cancel purchases and get all their money back any time before they move into their flats.

Such offers underscore the urgency among developers as they seize on a nascent rebound in sales and prices to generate cash and reduce record debt. Whether the recovery will gain traction is far from clear: While sales across the country jumped 32 percent in May from a year earlier, construction and property investment remain subdued.

"By taking this opportunity of a mild improvement in sentiment, developers are trying to sell quickly to get more liquidity," said Kaven Tsang, a Hong Kong-based analyst at Moody's Investors Service Inc.

Generous incentives to lure buyers are common in China. However, the wobbly state of developers' finances is adding to the urgency to clear inventories of unsold homes that stand at a three-year high of 430 million square meters.

Among 25 major Chinese developers tracked by Bloomberg Intelligence, only two generated positive cash flow from operations and investment in 2014. Meanwhile, their combined net debt jumped to a record 919 billion yuan ($148 billion).

After falling sales and prices put pressure on developers, the government started reversing course last year and eased some property curbs, igniting a recovery.

Cash flows at developers will probably improve slightly this year, supported by faster bank mortgage approvals after China's monetary easing, said RHB OSK Securities Hong Kong Ltd analyst Toni Ho. If sales gains prove sustainable, companies might consider accelerating land purchases, he said.

Bringing down their inventories may take longer now than in 2013, the last time the property market was booming. The 5.2 billion square meters of projects under development at the end of last year was almost five times greater than housing sales of 1.1 billion sq m for 2014, according to the bureau of statistics.

The ratio of inventory to contracted sales will continue to decrease though will likely remain above the low levels seen in 2013, according to Moody's Tsang.