More local funds invested in the Chinese mainland property market over 2007, especially in buying land to develop homes, said international property adviser DTZ in its latest report.

And the new hot spots in 2008 are expected to be Chengdu in Sichuan Province, Tianjin municipality, and Shenyang in Liaoning Province, the report said.

The central government's policies aimed at restraining overseas investment in commercial property began to bite in last year. The share of overseas investment in Chinese mainland property dropped from 21 percent in 2006 to 12 percent. However, funding from overseas investors still hit a record amount of money, DTZ said.

Many overseas investors, instead of directly investing in property subject to policy restrictions, opted to take over companies that own property, or formed joint ventures with local developers.

Compared with 2006 when only 323 investment transactions cost more than US$10 million, the number of such transactions increased to 658 in 2007, a year-on-year growth of 103.7 percent. That indicates that China remains a highlight in the global investment market, according to the DTZ report.

Most funds from domestic and overseas investors bought land to develop residential projects. There were 299 residential land sales in 2007, up from 112 in 2006 - a growth rate of 170 percent, said DTZ. Most land buys were in Chongqing (58 sales), followed by Hangzhou in neighboring Zhejiang Province with 53.

The two cities constituted 40 percent of the total, and the cities of Guangzhou, Chengdu and Tianjin also took considerable proportions - ranging between 8.7 percent to 12.8 percent.

For 2008, Chengdu, Tianjin and Shenyang are expected to shine in the Chinese mainland property market, DTZ predicted.

Benefiting from Chengdu's designation as an "experimental area on urban-rural co-development" in June 2007, sales of new homes in the city jumped from 8.6 million square meters in 2006 to 11.5 million square meters in 2007, an increase of more than 34 percent.

Foreign investment in the land market reached a total GFA (gross floor area) of 12.44 million square meters in 2007, with overseas developers including Keppel Land, CapitaLand and Sun Hung Kai Properties all snapping up land in the city. Domestic developers like China Vanke and Sino-Ocean also launched projects in Chengdu, underpinning its development for this year.

Meanwhile, in Tianjin, where the Binhai New District has been positioned as the third Chinese region of marked economic growth after the Pearl River Delta and the Yangtze River Delta, supply of new homes is estimated to reach 70 million square meters between 2006 and 2010.

And the average home price is expected to grow 37 percent, just behind Chengdu among all the mainland's second-tier cities.

For Shenyang, the southern hub of the three northeast provinces of China, an increasing number of overseas real estate companies, especially those from Hong Kong and Singapore, have been attracted to the city. Sales of new homes grew 48 percent in 2007.

Offices busy

DTZ estimated that direct overseas investment in Chengdu's property market may soar 71 percent in 2008, and sales price for new homes in Tianjin and Chengdu will both likely grow about 30 percent. Shenyang will maintain a 50-percent growth in terms of new home transactions, according to the report.