A government study from China showed that hot money flew into Chinese real estate market, trying to capitalize on China's booming housing market and speculate on Chinese currency appreciation.

Numbers from the study indicates that oversea investment in China's real estate market increased to 23.2% during Q4, 2004 from a year earlier level of 8.3%.

Statistic number from the Shanghai Branch of the People's Bank of China show that during the first 11 months of 2004, foreigh investment in Shanghai's real estate market, (the hottest real estate market in China) exceeded 22.2 billion Yuan, an increase of 13% over 2003.

The study suggested that foreign hot money chasing China's real estate market flew in through three main channels, including direct investment (purchase of properties), joint venture in real estate development, and commercial loans to company or persons inesting in real estate in China.