The housing market frenzy is over. But many overseas funds believe that their best opportunity has just come, at a time when local developers are forced to offload projects and land lots for emergency cash.

Guangdong properties appear to be in high demand recently.

Bordering Hong Kong, the southern province comprises two first-tier cities, Guangzhou and Shenzhen, both having been enjoying superb economic growth. Despite a recent housing downturn, companies from Hong Kong and foreign countries are enjoying a buying spree in both cities.

Last week, Hong Kong-listed New World Development won in a solo auction its bid for a prime site in Guangzhou's new financial district of Zhujiang New Town at the minimum asking price of 1.06 billion yuan.

In response to stronger demand from abroad, the city government of Guangzhou has dropped a hint of "better communication" with overseas investors in feeding land supply in the near future.

More sites in Baiyun New Town, Yun Village, White Swan Lake and Zhujiang New Town zoned for commercial property development will be up for sale in the coming months.

At this point of time the market sees the rise of two types of easily identified sellers and buyers. The first type are those who had earlier on reaped good-looking profits from investing in the Pearl river Delta region and are now reducing their property assets.

On the buying front are cash-loaded overseas funds, which do not rely on lending, looking to take advantage of the distressed developers by either buying underpriced assets from them or joining forces in new projects.

Earlier in April, Hong Kong-listed China Aoyuan Property announced that it would sell a 50 percent stake in its real estate subsidiary to Macquarie-managed property fund to develop a project in Panyu District, Guangzhou with a total investment of HK$750 million.

Grade-A office properties capable of generating steady rental yield and long-term capital gains are proving to be a magnet for overseas money. Rumors have it that a couple of private equity funds from Europe and the Middle East have set foot in Guangzhou to view and negotiate deals for office properties in Tianhe CBD, Guangzhou.

Within easy reach of Hong Kong, Shenzhen's luxury residential sector is appealing to Middle East funds as well.

In August, Kuwait Finance House, the biggest lender by market capitalization in KSE, signed a $275 million deal with Nan Hai Limited to invest in a Peninsula project located in Shekou, Shenzhen. Similarly, a few other overseas funds are reported to be conducting feasibility studies at the moment.

However, the market is closely watching what sort of government policy is likely to be implemented in early 2009. Policy relaxation is widely expected by that time, but rules of game for overseas players may be rewritten at the same time.

The author is deputy managing director of Vigers Asia Pacific Holdings.

Editor: Yan