* China eased capital rules for foreign property investments
* China aiming to stem flow of capital leaving the country
* Concerns of weak yuan, slowing economy limit investor interest
By Clare Jim and Sinead Cruise
HONG KONG/LONDON Sept 2 (Reuters) - For foreign investors, Beijing's decision to make it easier for them to invest in Chinese real estate is on the right track but has come at the wrong time.
China announced last week that it was removing a series of cumbersome pieces of regulation on foreign property investment introduced in 2006 that have hindered investors from accessing what was once viewed as one of the most attractive real estate markets in the world.
The changes include reducing the amount of registered capital foreign investors need to hold before buying real estate and allowing China-based foreigners and companies to buy multiple properties, provided local government housing rules allow them to.
The move is seen by property experts as an attempt by Chinese authorities to stem the flow of capital leaving the country, with foreign investors unnerved by recent gyrations in the country's stock market and the unexpected devaluation of the yuan.
But foreign institutional property investors say while the reforms are welcome, clouds over China's growth outlook and concerns the yuan may be devalued further mean worries about the economy trump changes to investment rules.
"Potential foreign buyers will likely be concerned about the subdued China economic outlook and a softish renminbi," said Grosvenor Asia Pacific's Greater China investment managing director Yu Yang in Hong Kong.
Until two years ago China's property market had the perfect combination of attributes for foreign real estate investors- a strengthening currency, climbing rents and rising prices.
But property prices turned lower in late 2013 due to excess supply in both residential and commercial properties.
Foreign money spent in Chinese real estate development dropped 24.5 percent in the first seven months compared to a year ago, according to official data.
Since last September China has been rolling out a series of measures to stimulate the property sector, which accounts for 15 percent of GDP, including easing home purchase restrictions and loan requirement for local nationals.
Last week the central bank also cut interest rates and lowered the bank reserve requirements, for the fifth time since November.
But for foreign funds, signs of a recovery in the property market will likely be outweighed by China's move on August 11 to devalue the yuan and allow it to move more in line with market valuations.
Real estate experts say any transaction will now need to take into account a higher required currency risk premium and the likelihood of further yuan depreciation, which potentially leads to more costly hedging strategies.
"The difference between investing in Chinese equities or bonds and property is that you cannot simply jump in and out," said Rasheed Hassan, director in the cross-border investment team at global property consultancy Savills.
"It's a much longer trade and so you need to be comfortable about the medium term".
For foreign individuals, the reforms are likely to have even less of an impact.
While Chinese money has been pouring into property in countries such as Australia, the United States and Britain, there are few signs of wealthy foreigners wanting to bet on China.
The estimated 600,000 expatriates living in China will also be deterred by the fact that China's biggest cities of Shanghai, Beijing, Guangzhou and Shenzhen will still prevent anyone from buying multiple properties.
"The focus (of my clients) has been more on either places where fundamentals are strong like the U.S., or places where they feel it's cheap and could be a buy like Japan or Western Europe," said Taurus Wealth Advisors executive director John Lilley in Singapore.
"While they still buy into the long term China bullish story, I think over the short-medium term they really are either staying on the sidelines or participating in China using more liquid financial instruments." (Reporting by Clare Jim and Sinead Cruise; Additional reporting by Yimou Lee in HONG KONG, Swati Pandey in SYDNEY, and Aradhana Aravindan in SINGAPORE; Editing by Rachel Armstrong)