ONG KONG/SHANGHAI  - The property investment arm of Morgan Stanley (MS.N) is in final talks to sell a Chinese apartment complex to a unit of Singapore's Keppel Land (KLAN.SI), sources close to the deal said on Tuesday.

The deal comes as some foreign investors are keen to tap the booming Chinese property market, which has seen residential prices rise as much as a third last year in first-tier cities such as Beijing and Shanghai.

In the long term, this is a pretty good investment for any foreign investor, said Clement Luk, CEO of Eastern and Northeast China at Centaline Properties. But in the short term, rental yields will be quite low because residential prices in Shanghai have risen far too quickly.

The overall value of the luxury apartment property is estimated at about 900 million yuan ($130 million) and Morgan Stanley has owned it for about five years, the sources and local media said.

However, they would not disclose the total value of the sale of the complex, which is controlled by Morgan Stanley and partly owned by a local partner.

The sources declined to be identified because they were not authorized to talk to the media.

Alpha Investment Partners, a unit of Singapore's third-ranked developer Keppel Land, was in exclusive negotiations with Morgan Stanley Real Estate Asia to purchase the Jinlin Tiandi complex in downtown Shanghai, they said.

Local media said the complex included apartments with a total floor space of around 19,000 square meters, a 1,300-sq m clubhouse and a parking lot.

One of the sources said Alpha was the only bidder left after several rounds of negotiations and that the deal was expected to close within the next couple of months.

Executives at Alpha and Morgan Stanley declined comment.

If the deal is closed, it could be Alpha's first investment in mainland China, the sources said.

Some foreign investors have been active in China, though they are now watching closely as the Chinese government moves to rein in runaway prices for fears of a bubble forming.

China has been trying to curb sharp rises in property prices, deploying a combination of credit tightening measures, increasing supply of affordable housing and verbal persuasion.

Property prices in 70 major cities rose 7.8 percent in December from a year earlier, logging the fastest pace last year.

We still believe the Chinese government has no intention of applying broad tightening measures, but rather is likely to focus on reigning in investor demand and keeping residential price increases steady, Macquarie said in a report last week.

($ = 6.8 yuan)

(Additional reporting by George Chen in HONG KONG, Editing by Ian Geoghegan)