Palau's Chamber of Commerce says property values are going up rapidly and locals are reportedly being offered suitcases of cash for their land.
The chamber's comments come after a Chinese website advertised houses for sale in Palau complete with residency permits of up to 99-years and direct access to the US after two years.
The Island Times reports that the ad also offers buyers easy access from Palau to other countries including Japan, Korea, Philippines and Taiwan.
Palauans have access to the US through its Compact of Free Association with the US.
The Chamber of Commerce says it's sceptical about the advertisement's claims and advises investors to do their due diligence.
But its spokesperson, David Mason, also told Amelia Langford that Palau property is increasingly in high-demand with a corresponding boom in tourist numbers from China.