Facing pressure from new government measures, foreign institutional investors began to change their means of buying into China's booming real estate market in the second half of last year.

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"Equity investment has become more popular than asset investment, which dominated previously," said Tian Hui, director of the market research department of Regal Lloyds International's Beijing office.

Measures adopted last July, which shut the door on property ownership for foreign investors not registered in China, are believed by experts to be the biggest reason for the change.

"The shift from asset investment to equity investment means short-term speculation has been checked and indicates that new foreign capital hoping to tap into China's real estate market will follow this trend," said Tian.

In asset investment, foreign investors can directly purchase mature properties like offices or villas from local real estate developers and later sell them to make short-term profits. Equity investment means they buy stakes in development companies and hope to gain long-term returns.

Of the more than 100 overseas institutional real estate investors now active in China, a number of them are offshore and have now lost the right to buy assets directly from local developers.

The popularity of equity investment began last July when the central government for the first time decided to squeeze speculative foreign money out of the overheated market.

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