Over the years China has made tremendous success in using its land resources and the property market to promote production and economic growth. In 2002 China became the largest destination for foreign direct investment, most of which was in manufacturing. Coupled with huge domestic investment in manufacturing, China has emerged as a hub of Asian manufacturing and the third largest trading nation in the world in 2004. Meanwhile, the property industry has become a significant growth engine of the Chinese economy. The average growth of investment in property development was 32.3% in the last 15 years. The successful conclusion of the housing privatisation programme brought sustained prosperity in the housing market. Huge amount of space has also been made available to businesses. There are over 5.2 and 3.3 million square metres of modern quality office space in Beijing and Shanghai, respectively. Almost all of these offices were built after 1990 and are occupied by mainly international firms. The provision of quality retail space is speeding up and industrial space has been always in oversupply. Nevertheless, the quality of property as a major investment type is not yet completely understood by the policy makers. As a result the property investment market is still in its infancy. Major property developments are held by their developers and are rarely traded. Foreign involvement in property development and investment has been restricted to Chinese nationals from Hong Kong and Taiwan and ethnic Chinese from Southeast Asia and North America. Western financial institutions are absent from the market. This paper provides a preliminary analysis of an ongoing study of the property investment market in China. The paper focuses on the current status of the property investment markets in the two major cities of Beijing and Shanghai. It will identify areas requiring institutional reform to allow the property investment market to function efficiently, and provide policy and business strategy recommendations to government and businesses to optimise financial and social benefits from commercial property development. Data will be gathered by extensive literature review, interview survey and focus groups in the two cities.