A Chinese migrant worker builds scaffoldings at the construction site of a real estate project in Rizhao city, east Chinas Shandong province, May 1, 2014. [Photo/IC]

Grant Ji, senior director of the investment department at Savills Plc in Beijing , spent about 20 days in Eu rope last month, bringing his Chinese clients all institutional investors to seek opportunities overseas.

Trips such as this one have become routine for Ji. But just a year ago, he was spending much more time with international investors looking for opportunities in China.

"Given the rising uncertainties in China's real estate market, it is really difficult for international investors to find a project that can bring them appropriate gains with controllable risks," said Ji.

James Raynor, chief executive officer of international real estate fund Grosvenor Fund LP, said in late April that the HREI China Total Return Fund had suspended its financing plan. The fund, set up by Harvest Real Estate, had planned to raise $500 million to invest in Chinese real estate.

The news followed Hong Kong tycoon Li Ka-shing's sale of about 20 billion yuan ($3.2 billion) worth of commercial property in the Chinese mainland, which added to fears that many global real estate investors are pulling out of the mainland market.

"Due to economic recoveries in the United States and the European Union , it's easier for international investors to find opportunities in those places," said Ji. "Meanwhile, with rising concerns over a real estate bubble, it is getting harder for international investors to tell a good 'China story' and raise money for funds targeting the China market."

The property sector has been cooling this year. The average price in 100 key cities was 10,978 yuan per square meter in May, down 0.32 percent month-on-month, according to the China Index Academy Ltd, a Beijing-based research institute wholly owned by SouFun Holdings Ltd. That marked the first month-on-month drop since June 2012.

Moreover, risks are rising in the commercial property sector (retail and office space) formerly favored by investors, with a surplus of space in major cities.

According to a recent report by Cushman & Wakefield Inc, the world's largest private real estate services company, new supply of commercial property in the 30 cities that it monito rs will total 75 million sq m over the next few years, with a new supply peak of 20 million sq m this year. The firm forecast that about 18 million sq m in new commercial space will enter the market in 2015.

"International institutions' investment in China's real estate sector was mainly a bet on asset appreciation and rent growth, as well as a rising yuan. With all three factors showing signs of slowing down, they will probably choose more lucrative markets elsewhere," Ji said.

According to Pu Yonghao, regional chief investment officer at UBS AG, the correction in China's real estate market may last three to four years, depending on government policies. Based on international experience, a complete adjustment usually takes seven years.

"Although there's still hot money rushing into China seeking short-term lucrative opportunities, it is very obvious that long-term capital is flowing outward for investment opportunities globally," said Pu.

But some international investors are still actively seeking opportunities in China. Blackstone Group LP , for instance, raised a real estate fund targeting the Asia Pacific at the end of last year. It was the first time for Blackstone to raise such a fund.

"For long-term capital, there are still quite a number of opportunities in China, but the investment needs to be more careful and selective," said a managing director of a large-scale international real estate fund who declined to be named.

And for international real estate funds that have raised money for the Asia-Pacific region or China, their new investment targets are logistics , industry experts said.

Mao Daqing, executive vice-president of China Vanke Co Ltd , China's largest property developer by market value, said the real estate section of Blackstone has contacted Vanke seeking logistics opportunities in Hebei province.

According to international real estate service provider CBRE, three trends are underpinning the outlook for huge demand in the logistics sector: increasing expansion of organized retail, growing online user bases and surging e-commerce sales across the Asia-Pacific region.

Jonathan Hsu, director of Asia-Pacific research at CBRE, said that the warehouse market "sits atop fundamental and far-reaching structural trends, such as rapid urbanization , emerging consumer bases and evolving trade hubs that are shaping the economies of the Asia-Pacific region".

With an improving economic outlook, these fundamental trends will emerge in the form of the expansion of organized retail, growth of e-commerce and the increasing prominence of third-party logistics companies, forming a solid demand outlook for the region, Hsu added.

Ji said: "There are more international real estate funds showing interest in the logistics and warehouse sector."

CBRE sees China as the key growth market in the Asia-Pacific region, since it has the most compelling prospects for urbanized market growth over the next 10 years and strong potential for development in lower-tier cities.

Online user bases are expected to increase dramatically in the coming years, with an estimated 346 million additional online users in the Asia-Pacific region by 2020 and 156 million in China between 2013 and 2020, according to CBRE.

Operational success of e-commerce rests on inventory management and rapid delivery, requiring well-stocked and well-located logistics facilities.

While overall supply will increase by 80 percent year-on-year in 2014, low vacancy rates and strong demand will help offset the impact of increased completion.

CBRE expects that overall rental growth in its APAC Logistics Index will reach 3 to 4 percent in 2014, led by Hong Kong at 7.5 percent, followed by Tokyo, Shanghai and Guangzhou at 4 percent.