Property developers in the country are at the crossroads. While the skyrocketing prices signals improved prospects for companies, the government's plan to cool down the sector and the absence of foreign buyers indicates that all is not well on the realty front.

Nothing could justify this more than the complete absence of foreign buyers at many of the recent real estate expos. So much so that 30-year old Mar Fall was the only foreigner present at the launch of a residential project in Beijing's core CBD area recently, a place that is usually considered attractive for expatriates.

Fall, who hails from Senegal, said he was keen on purchasing a two-bedroom apartment in the capital after living in the city for five years. However, most of Fall's counterparts may not be so lucky as the policy restricting home purchases by foreigners came into effect again from Jan 1 this year.

Though the government has not made any official announcement in this regard, a spokesman from the Beijing Municipal Commission of Housing and Urban Development told China Daily that with last year's policy change ending on Dec 30, the restrictions are back in place.

China had in July 2006 launched a policy restricting property purchases by foreigners. As per the rules, only expatriates who have studied or lived in China for more than one year can buy property, with the purchase capped at one apartment for self-use.

The municipal government did away with the restriction temporarily last year as property prices in Beijing fell sharply during the global financial crisis.

The resumption of the curbs has had an obvious impact on the luxury residential segment. According to the research department of Centaline China, from Jan 1 to Jan 20, sales of apartments valued at over 3 million yuan in Beijing dropped 40.3 percent over the same period last year, the first drop since the second half of 2009.

Centaline statistics show that in 2009, expatriates' proportion in Beijing's pre-owned property market stood at 0.79 percent, while in deals for apartment valued higher than 3 million yuan, the figure was more than 10 percent. In 2007 and 2008, when the curbs were in place, the figures were 0.4 percent and 0.32 percent respectively.

"The restriction on foreigners' home purchases in China will affect sales of some of our high-end projects," said Han Wei, CapitaLand China's deputy general manager for North China.

"One of the major barriers is the currency. For those who don't work in China, they are allowed to exchange only a maximum of $50,000, which is not even enough to pay the down payment."

Though Beijing's property price has soared nearly 60 percent in 2009, Fall believes the current price is still attractive, given the location of the project and China's huge growth potential.

Yuwa Hedrick-Wong, Asia-Pacific economic advisor for MasterCard Worldwide, said unlike the property crash in the US, China's high real estate prices are shored up by residents' high-saving rates.

"Considering China's low leverage of mortgage, I don't see a serious bubble in the country's property market," he said.