Not deterred by new government regulations on foreign investment in China's real estate market, the US private equity firm the Carlyle Group have purchased more than US$100 million worth of property in Shanghai, Tuesday's Shanghai Securities Journal reports.

The American company invested approximately US$120 million to buy 110 villas in Minhang District of Shanghai in its first property purchase in the Chinese mainland market, said the report.

The report quoted an anonymous insider close to the deal as saying the luxury housing, located in Kunyang Road near an international tennis center, was part of a program called the "Zhongfang Forest Villa" being developed by Shanghai Zhongfang Real Estate Co. Ltd.

Citing statistics from the world's leading property advisor, Savills, the newspaper said that increasing demand had pushed up the rents for villas in Shanghai in the third quarter this year with monthly rates in Puxi climbing to US$23.6 per square meter.

Carlyle intends to lease the villas in pursuit of long-term returns, said the report. Investment opportunities in China's real estate market and the expected appreciation of the yuan mean the sector remains attractive to foreign capital, say analysts.

The report cited an unidentified analyst saying the Carlyle Group was cautious about investing in China's property market although it established a US$410 million fund in 2005 targeting Asian real estate.

The Chinese government in July placed new restrictions on foreign capital in the country's real estate market which were aimed at reining in galloping fixed asset investment and soaring house prices in China's major cities.

(Xinhua News Agency November 29, 2006)