Bund site may fetch record price

A prime plot of land on Shanghai's Bund is expected to fetch a record price for the mainland at auction.

The 57,000 square metre parcel of land on the west bank of the Huangpu River would go under the hammer soon, municipal officials announced yesterday, in a move to take advantage of the city's buoyant real estate market.

An executive with a Shanghai developer estimated the winning bid could hit 13.5 billion yuan (HK$15.33 billion). Earlier this month, state-owned developer China Overseas Land & Investment bought a 142,000 sqmetre plot in Shanghai's northern Putuo district for the current record of 7 billion yuan.

The total gross floor area of a commercial development on the site could top 370,000 sqmetres, the district government said in a statement.

'The mainland's domestic players, namely the insurance companies and state-owned conglomerates, are on the rise, as foreign investors have been squeezed by the global recession,' said David Hand, the head of investments at Jones Lang LaSalle China.

Any companies interested in submitting a bid for the Bund site would be required to file a draft blueprint for the development before they were allowed to take part in the auction, the statement said.

'The government should play down the speculation over a possible record price and focus on the quality of the design and planning,' said Yin Kunhua, a professor at the Shanghai University of Finance and Economics. 'Obviously, this plot has the potential to set a record, since the prime location is irresistible.'

The Bund is the city's must-see tourist destination and home to dozens of historical buildings.

The mainland property market has been in bullish mode since the beginning of the year, buoyed by strong liquidity as Beijing embarked on its economic stimulus policy.

Domestic companies flocked to the real estate market in the belief that the market would continue to grow.

Last week, two plots of prime land in Shanghai's Lujiazui finance and trade zone were acquired by Grand China Logistics Group and Poly Group at sky-high prices.

Grand China paid a record 36,500 yuan per square metre of gross floor area for a 37,000 sqmetre plot.

The Huangpu district government said the upcoming land sale was in line with Shanghai's ambitions to transform the city into a global financial and shipping hub to lure more financial institutions.