Morgan Stanley recently purchased a 24,000-square-metre land in the China's business hub, Shanghai for a high-rise office building project worth 1.3 billion yuan (USD 166.67 million).

This is another move of the large US investment firm to extend its investment in the real estate sector on the Chinese mainland, after it acquired in January this year a high-end housing project in Shanghai's Xuhui District for 530 million yuan, the Shanghai Securities News reported.

As small and medium sized real estate developers sell land for lack of money, overseas companies speed up acquiring stakes in them and their projects and will have a greater say in the mainland's high-end real estate market, the report said A total of USD 8.23 billion of overseas capital was invested in the mainland's real estate sector in 2006, up 51.9 per cent year on year, according to figures from the National Bureau of Statistics.

The increasing trend will continue this year, said the report, adding that the pursuit of high returns is the fundamental reason why foreign companies are coming in droves to buy stakes in the real estate sector.

A recent report from the Deutsche Bank's real estate investment advisor RREEF shows the gross profit rate is 20 per cent to 30 per cent for Chinese housing projects and is likely to surpass that for American ones in the future.