* Fund is overweight on cement, underweight on HK banks

* Adopts neutral stance on Hong Kong property

* Expects markets to consolidate, sees stocks at "fair value"

HONG KONG, Nov 5 (Reuters) - U.S. fund group Legg Mason Inc. (LM.N: Quote, Profile, Research) expects further upside for Chinese property stocks, but sees a risk of overheating in the Hong Kong housing market.

The asset manager's Hong Kong equity fund is up 45.6 percent in the year to date, lagging the benchmark Hang Seng Index .HSI, which is up 49.7 percent.

In July this year, Legg Mason favoured the Hong Kong property sector, with picks including Sun Hung Kai Properties (0016.HK: Quote, Profile, Research). It has since adopted a more neutral stance.

The real estate allocation in the group's Hong Kong equity fund was more than 18 percent, second only to banks with 33 percent, said Crystal Chan, the fund's head of Hong Kong and China investments, at a news conference on Thursday.

Prices for mass-market residential property in Hong Kong have surged more than 20 percent this year despite the economic downturn. Luxury property prices have soared more than 40 percent, benefitting from a low interest rate environment, excess liquidity globally and an influx of cash from newly-rich mainland Chinese.

"There will probably be more overheating in Hong Kong than in China only because there is limited supply that we are seeing in the Hong Kong market," Chan said.