Shanghai Lujiazui, a state-owned real estate giant, broke a six-month drought in transactions involving large commercial buildings when it acquired the 34-story POS Plaza office building in Pudong New Area from South Korea's Posco Engineering & Construction for RMB1.76 billion yuan (US$257.68 million).

The price was about 40% lower than the original asking price.

CITIC Capital Holdings, an investment arm of CITIC Group, China's largest financial conglomerate, is in talks to acquire a high-end residential project in downtown Jing'an District from Macquarie Group, Australia's largest investment bank.

CITIC Capital might pay RMB250 million for the 16,000-square-meter City Apartments, a serviced-apartment development located at the intersection of Yan'an and Shaanxi roads.

Greg Hyland, head of investment for Jones Lang LaSalle's Shanghai operations said, ‘Transactions involving domestic players are expected to increase as domestic insurance companies enter the market and cash-rich investors take a long-term view and look to acquire assets.'

An industry source told Shanghai Daily last week that a major Chinese bank is also close to purchasing an office building under construction in the city. Many Chinese insurers are already on the prowl for properties after receiving the green light from the central government to invest in real estate assets.

Insurance firms will be looking to buy modern office buildings in prime locations to boost their corporate images.

They are expected to rent out space they don't occupy.

Shanghai Daily reports that now the state of play marks a turn for a property market long dominated by overseas firms.

Last year, overseas investors spent RMB16.3 billion on real estate investments in Shanghai, down 26% from 2007, according to Jones Lang LaSalle statistics.

Indeed, DTZ predicted earlier that Shanghai will likely suffer a decline in overseas real estate investment this year, with acquisitions expected to decline to about RMB5 billion.