Shui On Group's Vincent Lo, who has replicated Shanghai's Xintiandi, his traditional stone-style luxury development, in cities across China said the country was facing a long term property supply shortage.

"I don't believe there is a property bubble in China at this point in time," Lo said in a talk at the Shanghai Foreign Correspondents Club.

"There is not enough land (on which to build) in China. That is a very important consideration. There's just not enough land," he said.

"There is so much money in the market. We still have one third of our buyers coming to pay cash. They don't even need a mortgage," Lo said.

"What's important is the market is not over-leveraged like in the West."

He said property prices were being driven by China's expanding economy, which grew 10.3 percent in 2010, and rapid urbanisation that sees an additional one percent of the country's 1.3 billion people move to cities each year.

However, he warned that property developers were beginning to feel the squeeze as Beijing curbs bank lending to rein in inflation and prevent asset bubbles.

"The industry is starting to feel it. That's why a lot of developers are keen to issue bonds, including ourselves. I expect going forward, credit will not be as easy especially with high inflation," he said.

The government has made fighting inflation a priority after the consumer price index rose 4.6 percent year on year in December, down from a two-year high of 5.1 percent in November.

The full-year inflation rate of 3.3 percent was also higher than the government's target of three percent.

Beijing, fearful of an explosion in bad loans if property prices fall sharply, this month ordered banks to keep more money in reserve, while it raised interest rates twice in the fourth quarter to put the brakes on lending.

Authorities have also hiked minimum downpayments needed for property transactions, limited the number of apartments families can buy and cracked down on high-end developments.

Despite these efforts, property prices in China's major cities posted their fourth straight month-on-month rise in December and sales picked up pace.

Lo's Hong Kong-listed Shui On Land Limited has rolled out upscale, low-density, "Tiandi"-style developments in the southwestern city of Chongqing, the east lake city of Hangzhou, the northeast port city of Dalian and the southern industrial city of Foshan.

Lo said his next major project would be developing a property he bought for 3.2 billion yuan ($486 million) next to Shanghai's Hongqiao airport and a new high-speed rail hub handling 1.1 million passengers daily.

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