THE Chinese surge into Sydney's apartment market appears set to continue with a mainland group going into due diligence on an Elizabeth Street office tower that could be converted into luxury flats. The Chinese group has emerged from a pack of contenders for the building at 227 Elizabeth Street, which is being sold by a Valad Property Group-run fund. The sale, being handled by Jones Lang LaSalle, has topped market expectations, with pricing on the building at about $140 million. The sum reflected the strong bidding, the real boost for pricing coming after the vendor called in PTW Architects to design a luxury 114-apartment residential tower to show the property's potential just as top-end sales in Sydney have surged. The asset is held in Valad's V Plus Fund, which is backed by the likes of Dutch institution APG, as well as Telstra Super, and the Abu Dhabi Investment Authority; it switched to a closed-end fund in 2011 and has since been opportunistically selling assets. Blackstone-owned Valad and Jones Lang LaSalle declined to comment. The prospective buyer follows Chinese-backed developer Bridgehill group, which last month paid about $82.5m for an old council depot in Zetland on the edge of the city's CBD for a giant apartment complex valued at more than $500m. Mainland groups seek to follow the lead of China's Greenland Group, which is proceeding with plans to sell apartments in Sydney's tallest tower, which it is developing on the old Sydney Water Board site.