Xu Jiayin, one of China’s richest men, was ordered to sell his Point Piper mansion within 90 days because it was purchased without approval of the Foreign Investment Review Board, according to a report in The Australian.

This is the first time since 2006 a treasurer has used FIRB rules to enforce a sale of foreign-owned residential property, according to the report.

The Treasury says that several properties are being investigated with the Treasure's office now being inundated with phone calls raising concerns about other unlawful purchases. A treasury spokesmen however denies a ‘witch-hunt’ is on.

“We definitely don’t want to create an atmosphere of xenophobia or anything else. We actually just want to be in a position where we maintain, preserve, and enhance the integrity of the foreign investment regime,” he said.

Real estate agents predict that the forced sale could result in a loss of up to 20 per cent of the property value for Mr Xu. Lawyers are warning that people not properly qualified or insured to advise foreign investors for such large investments are leading them in troubled waters.

Prices of luxury homes in Sydney spiked by 11 percent last year with no signs of it settling down as foreign interest in luxury properties not only from China but also Indonesia, Mexico, Turkey and Nigeria rise. ‘Ultra-high net worth individuals’ from these countries are apparently on the hunt for luxury international properties.

Sydney and Melbourne were recently listed as among the top-ten most expensive cities in the world. Some analysts report that beside the high-end properties, apartments in an around Australia’s major cities are currently also seeing strong demand from Asian investors.

The Treasury has warned that strict rules govern foreign investment in the Australian property market and recently announced a raft of new rules including visa checks, heavy fines, and forced sales to deter illegal foreign investment in the Australian housing market.