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China's mainland attracted US$2.77 billion of cross-border investment in property in the first half of this year, more than doubling the US$1.04 billion in the same period of 2005, an industry report said yesterday.

The cross-border investment in China, which is still completely made up of inbound investment from overseas, accounts for 58 percent of the nation's total direct real estate investment of US$4.75 billion, according to the report on global real estate capital by Jones Lang LaSalle.

There are growing concerns that the influx of overseas investment will aggravate speculation in the domestic housing market and put more pressure on surging property prices and the value of the yuan. Thus, the central government introduced a string of policies to strengthen the supervision of overseas investment in real estate in July.

Institutions can only invest in Chinese real estate through mainland incorporated enterprises.

Investors with total investment of more than US$10 million must have at least half of that as registered capital in the mainland enterprise.

"In the short-term, the new rules will require investors to re-examine their strategies and to try and work out suitable deal structures," said Terence Tang, head of China Investments for LaSalle.

But Tang said investors with clear mandates will continue to expand portfolios in China and more transactions will occur in the rest of 2006.

"Buyers and sellers are becoming better informed and more reasonable about returns as market transparency improves, thus allowing for an increase in transactions," he said.

The report said global sources funds were particularly active in Shanghai.

By September 2006, a total of 15 properties worth approximately US$1.8 billion were sold in Shanghai. All were purchased by major overseas institutional investors originating from the United States, Europe or Asia.