A consortium led by China Vanke and Greenland Group bought a commercial site in Shanghai for 5.43 billion yuan (HK$6.73 billion) yesterday, the highest price paid in the city this year.
"It shows that developers are upbeat about the commercial property market in Shanghai, given that they are willing to pay more than 5 billion yuan for a site," said Jim Yip Kin-shing, the managing director of investment at DTZ China.
The municipal government released the commercial site in the district of Xuhui for auction, with an opening bid of 5.43 billion yuan. China Vanke and Greenland teamed up with Guangzhou Gangjie and Ziuzhi Hotel Management to win the site with the opening bid.
The site, next to the Shanghai South Railway Station, covers an area of 107,486 square metres. It can provide a gross floor area of 493,727 sq ft.
The site is limited to commercial use. Its accommodation value - land cost divided by buildable gross floor area - is about 11,000 yuan per square metre.
"The price of 11,000 yuan per square metre is reasonable," Yip said.
He said commercial sites near the airport had been selling for about 15,000 yuan per square metre.
Yip said the site was next to a high-speed-train station, which links Shanghai to other cities. Although the area houses mainly residential buildings, he said it would be Shanghai's second-tier business district in future.
China Vanke said that as Shanghai grew into an international financial centre, the company needed to strengthen its ability to develop commercial properties. But it said the purchase did not imply a change in the strategy of the company, which had been focusing on residential projects.
Mainland developers turned active in land acquisitions after the property market stabilised this year. According to People's Daily Online, the top four developers - China Vanke, Poly Real Estate, China Overseas and Evergrande Real Estate - spent a total of 104.09 billion yuan from January 1 to December 6.
Until yesterday, the most expensive site in Shanghai this year had been a commercial and residential site in the same district that Poly bought for 4.5 billion yuan in October.