Growing numbers of adventurous British fly-to-let investors are bypassing central Europe and Dubai and continuing east to China, unfazed by the distance from home and the fact that, for all its newfound capitalist ways, the government is still nominally communist.

So where do you start in a country 40 times the size of Britain with a population of 1.3 billion? Go to a far-flung grim industrial town, and you could pick up a flat for little more than the cost of a pair of Peking ducks and a portion of fried rice.

But let’s be realistic. How are you going to find a property in the first place, let alone somebody to let it out to? All things considered, the least-hassle choice for a UK-based investor must be Beijing or Shanghai — and the winner is Shanghai.

China’s commercial and financial capital, Shanghai is already home to 21m people, and keeps on growing, as multinationals relocate their regional headquarters from Hong Kong or Singapore, and locals move in from the surrounding countryside.

With a new Formula One track and the 170mph magnetic- levitation train to the airport, the prospect of new Disney and Universal Studios theme parks opening soon and the 2010 World Expo, this is a city that is going places. The Puxi district, the traditional heart of Shanghai, has a pleasing mixture of British and French colonial architecture with modern skyscrapers.

David Cunningham, managing director of agent Shanghai Vision, advises buying centrally, ideally near the rapidly expanding metro system.

“Lots of people who go out there are shown high-end flats for £750,000 because they assume this is what foreigners want, but there is a very limited rental market,” he says. “We suggest spending £112,000- £130,000 on something you can rent out not just to foreigners, but also to the emerging Chinese middle class.”

The oddly named Dynamic Crystal development is in the Pudong Lujiazui financial district, east of the Huangpu River that divides the city. For £116,000-£134,000, you can get a 69sq m-73sq m studio flat, decorated and furnished “to international hotel standard in classic French or Japanese style”. There is also a guaranteed 7% gross income per year from scheduled completion in February 2007. Many of Cunningham’s buyers are bankers, airline pilots or others who already know the region.

Surprisingly, though, of the 670 or so people who have bought from the company since he set it up three years ago, only three have been to see their property before signing up.

Take Alan Jones, 49, a technician from Norwich. An F1 fan, he was so impressed by what he read about Shanghai, he bought a flat last June for just under £100,000 in the Chang Ning district. He has since travelled to the city and bought a second flat and an option on a third.

“Shanghai is an amazing place,” he says. “I spoke to other investors while I was there and realised it was too good an opportunity to miss.”

If Jones is dipping his toes into the Shanghai market, Nicola Ogilvie, 30, from Bristol has plunged straight in. Based in China since 1997, she acquired her first property in the city with her boyfriend in 2001 and has since bought over 30 more, which she has renovated and sold on.

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