China Resources Land buys site in Qianhai for 10.9b yuan
Mainland developer buys land for 10.9 billion yuan, making it Shenzhen's most costly site
China Resources Land, the property flagship of state-owned China Resources (Holdings), paid a jaw-dropping 10.9 billion yuan (HK$13.8 billion) for the third commercial site in the Qianhai special economic zone, which failed to attract any bids from Hong Kong developers.
The winning bid was 62 per cent above the floor price of 6.72 billion yuan and nearly 20 per cent higher than the only other bid, of 9.09 billion yuan from Shimao Property. The site, the last and the biggest in the first batch of land sales in Qianhai, is now Shenzhen's most costly.
Bidding was restricted to Hong Kong-listed firms with revenue for the past financial year of no less than 20 billion yuan.
The site will yield a total gross floor area of 503,000 square metres for offices, retail shops, hotels and serviced apartments.
Vincent Cheung Kiu-cho, national director for Greater China at Cushman & Wakefield, said that the higher than expected price could, to a certain extent, reflect the state-owned firm's desire to show support for Beijing's grand plan to transform the 15-kilometre strip of land into the "Manhattan of the Pearl River Delta".
"The result is not a surprise," Cheung said.
Inclusive of land cost, he estimated total investment in the project, equivalent in size to IFC One and Two in Central, would be 21 billion yuan.
"CR Land's MixC in Shenzhen is a landmark shopping mall in the city," said Cheung, who had forecast a bid of 10.1 billion yuan.
He said one of the conditions, requiring the developer to hold one-third of the site, or 165,990 square metres, for its own long-term use, could have dampened interest from Hong Kong developers.
CR Land had placed the lowest bids for the two sites in Qianhai auctioned off last month. Its bid of 4.7 billion yuan for one site was the minimum asked by the authority, and its bid for the other was 66 yuan higher than the 3.56 billion yuan minimum bid.
A CR Land vice-president said the firm was just testing the waters in the first land sale.
"This plot is our target," he said, pledging that the company would comply fully with the terms and conditions, including reserving the required space for its own use.
Alvin Lau, managing director of CBRE Southern China, said the winning bid was on the high side of expectations, adding: "This is the highest in terms of unit price for commercial usage [in Shenzhen] as of today."
Shares of CR Land fell 3.35 per cent to close at HK$23.05 yesterday. The Hang Seng Index dropped 0.1 per cent.
Last year, CR Land's turnover reached HK$44.36 billion, with net profit of HK$10.56 billion. The mainland developer has a total land bank of 29.36 million square metres in 42 cities.