Chinese institutions eyeing properties abroad

Compared with domestic real estate developers, China's institutional investors have a shorter history of direct property investment.

However, Chen said, China's insurance and sovereign wealth funds will become active in overseas property markets, with many seeking quality office properties in international gateway cities.

Although there are no successful cases of outbound real estate investment so far for Chinese insurance funds, the report said they are soon to come.

In the future, about $14.4 billion in Chinese insurance capital will be invested in overseas real estate markets, the report estimated.

Sovereign wealth funds are also heavyweight players in overseas property investment, said the report, citing the history of capital allocation of global sovereign wealth funds to real estate property investment and recent activity by China's sovereign wealth funds in real estate investments.

As of the end of 2012, China's sovereign wealth funds were the world's largest, with total assets of $1.49 trillion, according to the report.

While Chinese investors are setting sight overseas, the Chinese real estate market and Shanghai in particular are hot spots for investors.

In the first half, Jones Lang LaSalle said, about 20.4 billion yuan worth of properties were traded in Shanghai, up 64 percent year-on-year.

"An increased focus on first-tier cities has coincided with an increased allocation of capital to China by global core investors, such as pension funds and sovereign wealth funds, which previously viewed the market here as too risky," said Alan Li, head of investment for Jones Lang LaSalle Shanghai.

"These buyers are now increasingly focused on Shanghai's commercial market as a source of core and core-plus investments," said Li.