Shanghai has seen record overseas investment in the property market, despite central and local government efforts to curb foreign capital inflow into the sector.

A report from global real estate consultancy DTZ showed overseas institutional investors injected more than 18 billion yuan into Shanghai's real estate market in 2006, covering a total floor space of 1 million square meters. The two figures were both three times those of 2005.

The DTZ study revealed that overseas institutional investors did not waste any time snapping up the city's residential, office and commercial space last year, except in July and August when the government policies were heightened.

DTZ investment department director Yip Kin Shing told Shanghai Securities News last week that overseas investors continued to be major players in Shanghai's property market in 2006.

Yip said overseas insti-tutional investors would penetrate further into China's real estate market in 2007. Their investment is expected to exceed that of last year, focusing mainly on office buildings, serviced apartments, commercial space and logistics warehousing.

While primarily targeting first-tier cities, more overseas capital is expected to enter second-tier cities by teaming up with local developers, according to Yip.

Faced with steep property prices that have sparked widespread concern, the government issued rules in the middle of last year to restrict overseas investment in the country's real estate market.

At present, overseas investment pours into the city's property market mainly through three channels mutual fund investment in property, direct purchases of office and commercial space, and individual purchases of apartments.

Large institutional investors such as Morgan Stanley, Goldman Sachs, Citigroup and the Carlyle Group have often made headlines with big purchases in Shanghai.

The Shanghai Land Administration recently launched the Shanghai Land Investigation and Planning Institution to provide technical support to ensure the city's limited land resources are put to better use.

(China Daily January 10, 2007)