A recent report from Wind Information Co, an independent research firm, suggested 30 per cent of the 2,000 or so property developers in Shanghai would quit the market before the end of 2006.

Even the largest developers will have to drastically adjust their business strategy in light of the new government measures and revised bank lending policies.

Shanghai Greenland Group, one of the country's five largest property development companies, with annual sales in excess of 15 billion yuan(US$1.8billion), is fast tracking plans to raise capital in international markets.

According to Zhang Yuliang, president of Shanghai Greenland, credit tightening is "wreaking havoc" on property markets across the country. He admitted that sluggish sales have put the brakes on the company's previously rapid expansion. In the past two years, a more than 40 billion yuan (US$5 billion) spending spree has seen Shanghai Greenland extended its property development portfolio to 17 cities, including Beijing, Xuzhou and Changzhou.

But sales of Greenland properties in 16 of those cities have plummeted by up to 50 per cent since government measures to cool the market came into effect. In some cities, sales tumbled by 60 to 70 per cent, Zhang said.

"We are keen on raising additional capital in the near future," he adds. "We hope we can attract investment from some of the larger international property trusts." And he has reason to be optimistic  last year, Shanghai Greenland secured a 700 million yuan (US$87.5 million) loan from Germany's Hypo Real Estate Bank International.

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