Morgan Stanley has recently purchased a 24,000-square-meter land in Luwan District of downtown Shanghai for a high-rise office building project worth 1.3 billion yuan (166.67 million U.S. dollars), the Shanghai Securities News reported on Saturday.

This is another move of the large U.S. 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.

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, said the report.

The Hong Kong-listed Kowloon Development Co. Ltd. announced on Jan. 19 that it would raise 5.29 billion Hong Kong dollars to invest in the mainland's real estate projects.

On Jan 31, chairman of Hang Lung Properties Ltd. Ronnie Chichung Chan said his company planned to invest 10 billion Hong Kong dollars in 2007 to increase its land reserves by 800,000 square meters on the mainland.

At the beginning of February, Cheung Kong (Holdings) Ltd. and Hutchison Whampoa Ltd. acquired a 177,300-square-meter land in Shanghai's Putuo District for 2.2 billion Hong Kong dollars.

Meanwhile, a number of domestic real estate companies - including the Shanghai-based Shimao Group, the Hangzhou-based Greentown Real Estate Group and the Beijing-based Capital Group - have received international private equity investments, said the report.

On Jan. 30, the U.S. private equity firm Warburg Pincus set its foot in the mainland's real estate sector by purchasing a 25 percent stake in Shanghai Zhongkai Real Estate Development and Management Co. for 30 million U.S. dollars.

On Feb. 17, the ING Group of the Netherlands acquired a 49 percent stake in a subsidiary of the Shenzhen-based real estate giant Gemdale Group.

A total of 8.23 billion U.S. dollars of overseas capital was invested in the mainland's real estate sector in 2006, up 51.9 percent 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 are the fundamental reason why overseas companies are coming in droves to buy stakes in the sector.

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

Meanwhile, investment in office building yields eight percent in Beijing and Shanghai, compared with seven percent in New York, Chicago and Toronto and four percent to five percent in Paris, Sydney and Hong Kong, according to a report from the CB Richard Ellis, the world's leading real estate services firm.