Falling Chinese investment in UK real estate could pose a serious risk to commercial property prices as demand softens, analysts have warned.

China’s cabinet on Friday issued guidelines to regulate overseas activity in a change that could signal the end of the country’s frenzied M&A activity in recent years.

Beijing will limit deals in property, hotels, entertainment, sports clubs, and the film industry, stepping up its campaign against what the state planner described as the "irrational” acquisitions of foreign assets.

But some property experts have indicated that this might have an effect on prices for property in the UK because demand has been driven by Chinese buyers in recent years.

Mike Prew, analyst at Jefferies, said: "We believe commercial real estate prices are factoring in unrealistic income growth as the influx of Chinese money tails off.

"The next foreign buyers in the queue will pay a lower entry premium as headline rents fall, so the REIT majors risk another de-rating."

Eric Pang, head of JLL’s China desk, said he expected the same volume of investment form Chinese companies, but it would be “more regulated, more targeted, and from more mature, experienced investors”.

Recent years have seen a huge range of Chinese investors in UK real estate, many of which are investing outside of their home market for the first time. These sorts of investors could be limited in future.