The International Finance News, a publication owned by The People's Daily, this month said that the State Administration of Foreign Exchange could use "technical" restrictions, like tightening transaction settlement procedures and strengthening supervision of real estate companies receiving foreign funds or listing overseas.

With foreign investors poised to pour billions of dollars into Chinese real estate, restricting investment from overseas could help slow growth in foreign- exchange reserves and ease pressure on property prices.

"Funds from all over the world are trying to get into the Asia-Pacific, and on top of their list is China," said Guy Hollis, head of the U.S. real estate consultant Jones Lang LaSalle's investment arm. "About $30 billion in overseas funds wants to find a home in China."

Speculation that China will let its currency gain at a faster pace increases the lure of property. China revalued the yuan almost a year ago and loosened its peg to the dollar.

"One way that you can bet on an appreciation in the currency is to own assets in China, and real estate has been the favorite one with capital gains being pretty good," said John Kyriakopoulos, a currency strategist at National Australia Bank in Sydney.

Overseas institutions bought property worth of $3.4 billion in China last year, the State Administration of Foreign Exchange said in April. That did not include "lots" of transactions that cannot be tracked and confirmed, said Remy Chan, the head of markets at Jones Lang LaSalle, who is based in Shanghai.

Foreign investors are entering China's property market by investing in Chinese developers or forming a locally registered entity like a private equity fund to acquire existing properties.

In some cases, foreign lenders are involved in financing such operations, said Jun Ma, head of China research at Deutsche Bank in Hong Kong.

In the past five months, international investment banks and real estate funds have announced plans to invest more than $5 billion in Chinese property.