The stocks of U.S. homebuilders and commercial real estate investment trusts soared in recent years. But with leading companies like Toll Brothers (NYSE:TOL) and KB Homes (NYSE:KBH) reporting a crash in new orders, investors need to look elsewhere for growth.

Hundreds of millions of rural Chinese will move to the cities in years to come. Most of the apartments they will live in have not been built yet. You can make money from that. And not just with China ETFs like the Greater China Fund (NYSE; GCH) or the new iShares FTSE/Xinhua China 25 Index Fund (AMEX:FXI). Shenzhen Investment (OTC BB: SZNTF) is a pure play on Chinese urbanization and development.

Formerly a state-owned corporation, Shenzhen is now 51% publicly owned, with 49% kept by the local government. Shenzhen's location can't be beat. According to Wikipedia:

Shenzhen is a sub-provincial city of Guangdong province in southern China, located at the border with the Hong Kong Special Administrative Region. Shenzhen is a centre of foreign investment and since the late 1970s has been one of the fastest growing cities in the world. It is also the busiest port in China. In the past two decades, outsiders have invested more than $30 billion in Shenzhen for building factories and forming joint ventures.

If you are looking for a hot location in China, right next door to Hong Kong, it fits the bill.

Like many state conglomerates, Shenzhen had its finger in many different pies, too many to stay focused. Its primary focus is residential apartments, office and industrial buildings, and highway development. But it recently shed interests in the local cable TV monopoly, a power company, and a Hitachi subsidiary. It also sold 44% of its Jingdong Expressway project to an insurance company, keeping a 46% stake and operational control over the project.

The combined proceeds from those sales will go into "landbank acquisitions," buying more land to develop. More than 90% of the current net asset value (essentially core assets minus debt, also known as NAV) is now in property-related assets.

Citigroup's China analysts believe that Shenzhen's NAV will be HK$6.38 per share in 12 months. They set their target price at HK$5.10, discounting the cost of developing Shenzhen's landbank holdings into finished properties. That is still a healthy 45% gain from today's prices, including the 8.6% dividend yield.

Citigroup's optimism is based in part on strong property sales at Shenzhen's flagship residential project, Shum Yip Coast, where phase 2 was 92% sold out only four months after the launch. Selling prices exceeded expectations. Thanks to that one project, Shenzhen has already locked in more than 40% of expected FY2007 property sales.

Shenzhen has traded at a discount to other Chinese property stocks, thanks to its diversified holdings and focus. Citigroup expects that to change as the company restructures to focus more on developing its landbank. Landbank holdings could expand up to 20% this year as Shenzhen puts its new cash hoard to work. Property development will also accelerate, with four times more square footage expected to be completed in 2008 than in 2006, and further expansion in 2009 and beyond.

As with many stocks listed in Hong Kong, Shenzhen's share price is low in Hong Kong dollars, and a "penny stock" in U.S. American Depositary Receipts. But the market cap exceeds U.S.$1 billion, making Shenzhen a promising small cap bet on the Chinese land rush.

More Chinese Foolishness:

Who says it's a small world? To find the best companies to invest in wherever they do business, join Bill Mann and his team at Global Gains.

Fool contributor Dale Baker, a private client portfolio manager and former U.S. diplomat with extensive experience in Europe and Africa, owns shares in Shenzhen Investments. He welcomes your questions or comments.