In certain Chinese cities where there's housing oversupply, property prices are likely to drop by 10%-15% in the short term, said Harvey Coe, managing director of real estate advisory services at EY in an interview with The Asset. But in other areas of the country, prices should remain stable, he added.

"In the long run, China is still a very good market to get into," remarked Coe, whose appointment to the leadership role was announced on August 13. The Chinese government's massive urbanization plans will continue to drive migration from rural areas to cities, generating demand for housing and increasing consumption. "Both residential and commercial sectors will benefit from this," he said.

Oversupply affects residential properties mostly in smaller, third- and fourth-tier cities, like Wenzhou, Kunming, or Dongying, according to Coe. Commercial properties in larger centres like Chengdu and Shenyang are also experiencing oversupply and some developers have started lowering prices.

A few Chinese cities have recently relaxed restrictions on property purchases to spur declining sales. This isn't likely to lead to more speculative market activities, he said, adding, "Nowadays investors in China have more investment options."

Overseas property and stock markets provide an outlet for high-net-worth individuals to invest. "We've seen a lot of activity going out from China. Chinese developers buying up trophy assets in New York, Los Angeles, London. Recently a lot of activity is going on in Australia," Coe observed.

While diversification of investments is an obvious driver, another reason may be symbolic. "Large developers are already doing well in China. They might want to be seen as truly international by establishing footholds in the overseas markets."

Foreign investors in China, on the other hand, are taking a more cautious approach. Given the government's recent tightening policy, they are less willing to take risk on residential developments, said Coe.

"One obvious hot area is logistics," he added, noting that with rapid urbanization and expansion of e-commerce, logistics properties are in demand by foreign investors.

EY, formerly known as Ernst & Young, is a global firm offering professional services in the areas of assurance, tax, transaction and advisory services. "We have strong capital markets teams in Europe, US and Australia, where we help our clients in Asia to do cross-border investments," said Coe. The services include identifying investment opportunities, seeking joint venture partners, providing due diligence and advising on overseas tax issues.