HONG KONG: More foreign funds are expected to flow to the mainland's real estate sector this year, with investors unfazed by the possibility of further measures to bring down prices, market watchers say.

Related readings:  Nation to stabilize realty prices  More Hongkongers buy properties in mainland  Property prices continue to soar

"With the continuing growth of the mainland economy, capital will keep flowing in," said Francis Li, vice-chairman and head of investment at DTZ North Asia.

Li said the mainland would remain a magnet for overseas property investors for the next 10 years. "In 2007, the strong market sentiment will continue to boost the inflow of foreign funds. And we are expecting a 25 percent rise in transaction volume," he said.

According to a DTZ report, the total number of building transactions involving foreign investment jumped 38 percent to 40 in 2006, while the total under consideration rocketed 67 percent to $3.8 billion.

Top investment firms including Goldman Sachs and Morgan Stanley all stepped up investment in the market. According to a Jones Lang LaSalle report, large investment funds injected over $580 billion to the market in the third quarter of 2006 alone.

"Notable transactions included Goldman Sachs purchasing the Exchange in Beijing for $100 million, and Citibank acquiring the Daning Life Hub in Shanghai from Shanghai Forrester Development for $66 million," the report said.

And Capital Strategic Investment Ltd (CSI) recently teamed up with Lehman Brothers to buy the Fuhai Commercial Center in Shanghai.

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