Analysts expect strong interest from Hong Kong and mainland property developers in the first land auction for Shenzhen's Qianhai district.
Qianhai, a 15 square kilometre zone, would launch its first public land auction in the first half of the year, Xinhua reported.
After the land was auctioned off, 4 million to 5 million square metres of residential property would be built on it this year, the agency said.
The central government has designated Qianhai as an experimental zone for more liberal use of the yuan and freer capital account convertibility than the rest of the country.
"This is the first land auction for Qianhai, so the financial transactions will set the benchmark for its land market," said Jim Yip, a managing director of China investment at property firm DTZ. "There should be huge demand for residential property in Qianhai. The government designated Qianhai as a central business district and for high-end development."
The auction would probably include commercial and residential property, Yip said.
"At the moment, there is a lot of demand from mainland and Hong Kong developers for property in Qianhai," he said. "Shenzhen's office market is strong. The government is positioning Shenzhen to be the financial hub for southern China. A lot of Chinese financial companies want to set up their regional headquarters in Qianhai."
By the end of last month, 236 companies had registered in Qianhai, with total registered capital of 24.8 billion yuan (HK$30.65 billion), Xinhuareported.
"Mainland and Hong Kong developers are interested in this auction because Qianhai is so near Hong Kong," said Edward Farrelly, the head of Hong Kong, Macau and Taiwan research at property services firm CBRE.
Qianhai is one hour's drive from Hong Kong.
"We've seen elevated interest in Qianhai due to a lack of land in Hong Kong," said Farrelly. In the coming decade, Hong Kong would have a shortfall of 6 million to 9 million square feet of office space, while Qianhai would offer 120 million sqft of space, he said.
"International companies prefer Hong Kong," he said. "The message for the Hong Kong government is if it does not make the space available in Hong Kong, companies will consider other areas such as Qianhai."