One firm that has benefited from the new measures is First China Property Group, the first non-Asian firm to secure a foothold in the Shanghai market, in September 2003.

"We now feel that we can compete head to head with local developers in a transparent market," revealed Richard David, the firm’s chief executive officer, according to a Xinhua state media report.

The People’s Bank of China recently placed tighter credit restrictions on property lending in a bid to rein in borrowing by land developers, a measure which is shaking out the local bad apples whilst also allowing better-financed foreign firms into the frame.

"What is happening in Shanghai's property market is a financing replacement process. Sites will now only go to legitimate buyers that are well capitalized," David observed.

First China Property, a joint venture between Australian Macquarie Bank and investment fund Schroeder Asian Properties, recently won a bid to secure an 83,000 square metre plot in Anting, one of China’s new towns.

The firm plans to develop US$400 million of projects in Shanghai and other centres in China over the next five years.

The city’s real estate market has been rising sharply in recent years. Between 2001 and 2003, residential property prices in Shanghai increased by 25% annually.

However, David rejects suggestions that a bubble is forming in the country’s property sector, pointing to a decision by the central government in 1997 to prevent state-owned firms providing their workers with cheap housing, thus creating sustained demand in the market.