The Hong Kong government fetched a record HK$42 billion (US$5.37 billion) for a plot of land, a sale coming in at the lower end of estimates after the financial hub has been rocked by six months of pro-democracy protests.
A tender for the site, which sits atop the high-speed railway station in Kowloon that connects to China’s urban hubs, was won by Sun Hung Kai Properties Ltd (新鴻基地產), the territory said late on Wednesday.
The plot is expected to yield 294,000m2 of floor area with offices, a luxury hotel as well as retail space. It is adjacent to Hong Kong’s tallest building, the International Commerce Centre, also owned by Sun Hung Kai, a firm controlled by the billionaire Kwok (郭) family.
The price far surpasses the previous land record of US$3.2 billion paid for a residential site in Kai Tak last year.
Analysts had valued the Kowloon plot in a range of US$4 billion to US$12 billion ahead of the auction.
“The site will house offices, a hotel and a mall, which will be highly exposed to social movements and the city’s economy in the future,” said Thomas Lam (林浩文), executive director of valuation and consultancy at Knight Frank LLP in Hong Kong. “Developers had to consider this when making their offers.”
Sun Hung Kai is interested in inviting long-term strategic investors in the development of the site, chairman Raymond Kwok (郭炳聯) said in a statement.
The completion of the project would provide the company with stable and promising rental income, he added.
After another land sale failed in September, the deal marks a partial vote of confidence in one of the world’s most expensive real-estate markets amid unprecedented turmoil and provides authorities with a welcome financial injection.
The territory’s office market suffered its worst decline in more than a decade last month amid the protests.
However, turmoil subsided in the days up to Wednesday’s announcement, which also follows Sunday’s district elections where pro-democracy candidates scored a landslide victory.
CK Asset Holdings Ltd (長江實業) and a group formed by Chinese Estates Holdings Ltd (華人置業集團), Henderson Land Development Co (恆基地產), Lifestyle International Holdings Ltd (利福國際), Sino Land Co Ltd (信和置業) and Wharf Estates Ltd (九龍倉置業) also submitted bids for the site.
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