FOREIGN investment in China's real estate market in the future will shift focus from property development to retail outlets and office buildings, says Mr J. Arthur McInnis, chairman of the Canadian Chamber of Commerce in Hongkong. Outlining the principal trends of the mainland market in a seminar yesterday, he said that retail and commercial investment was set to surge in response to increasing demand from overseas investors. To help seek opportunities in southern China, the Chamber of Commerce led a trade commission to Zhongshan, Shunde and Foshan about 10 days ago. Mr McInnis said opportunities for retail investment abounded in Shanghai and Guangzhou, where muncipal governments greatly encouraged extensive urban redevelopment and setting up of large commercial centres. He said that evidence of retail activity among foreign businessmen in co-operative projects was very strong and this activity would foreshadow plans for surrounding properties. However, Mr McInnis also noted inherent risks in the face of property law and regulation. For instance, the series of new property regulations announced by Guangzhou towards the end of last year was the first indication of a crackdown, he said. He said that some projects had fallen through and there was concern about excessive sale of land to foreign buyers. The continued high inflation rate in China has also affected the completion of certain developments around Dongguan, Dan Shui and Zhongshan. Mr McInnis said that some developers sought to return deposits to buyers rather than complete the projects when the pre-sale was followed by lower than expected returns. Meanwhile, Ricacorp Properties managing director Barry Law expected further consolidation of the property market for foreign sales in the first half of the year given the huge supply released in the Pearl River Delta region last year. As the bulk of those pre-sale units were bought by Hongkong buyers for investment use, he said that secondary markets could find very scarce support in 1993. In order to boost sales, more developers would try to provide favourable terms on payments or furniture and electrical appliances, he said. The escalating building cost as a result of the booming economy and inflation would also oust the lesser developers out of the mainland property markets in 1993, he said.