In response to fears that pre-sold property in the Pearl River Delta would not be built, the Chinese Government had tightened up conditions.

''We hope the worst is now over,'' Mr Ng said.

Most Chinese cities will demand that a developer cannot pre-sell unless it has already undertaken 25 per cent of the development costs - so the investors' risk is reduced.

Mr Ng said that tax was an area that needed a lot of caution.

He said the law differentiated between developers and investors.

Developers were subject to a turnover tax, called business tax, which amounts to five per cent of sales proceeds irrespective the company has made a profit or a loss.

Stamp duty in China is lower than in Hongkong, at 0.05 per cent, and other charges such as notary public fees are low.

Income tax, which runs at 33 per cent for developers, when added to the turnover tax can amount to a significant sum. Investors are subject to 10 per cent income tax.

Mr Ng said there were various tax structures and fees but the major consideration when investing in mainland property was the Land Appreciation Fee, which applied to both developers and investors.

The Land Appreciation Fee, often referred to as a capital gains tax, is the fee paid on the transfer of the land user right (the method by which foreigners are allowed to deal in property in China) collected by the Land Administration Bureau, rather thanthe Tax Bureau.

There is no nationwide standard controlling this fee, so it can vary wildly.

In Shanghai, it does not exist, but in Shenzhen it can be as high as 100 per cent of the gain.

Mr Ng said it was a progressive rate of 40 to 100 per cent and the highest rate would only be payable on a considerable profit.