The debt crisis affecting Chinese developers, which has reduced the bidding frenzy at land auctions in the mainland, has given a Hong Kong property firm an opportunity to acquire a prime parcel. On Tuesday, Hong Kong conglomerate HKR International won a prime residential site in Shanghai with a bid of 830.4 million yuan (US$130.4 million), its first acquisition in China’s commercial capital in nearly two decades. The Shanghai municipal government is currently conducting its third land auction of the year. So far only eight out of the available 27 plots have been sold, with most of the lots bought by state-owned enterprises. The auction, spread over five days, ends on Friday. “We feel the competition is less compared to previous land sales,” said Violet Lam, general manager for business development and marketing at HKR International. The company behind the Discovery Bay community on Hong Kong’s Lantau Island will also consider taking part in the upcoming auction in Hangzhou, the capital of Zhejiang province, in the coming weeks, she added. As major mainland Chinese cities have recorded a tepid response to land auctions in recent months, some governments have slashed prices to drum up demand. In September, as many as 206 land parcels were withdrawn from auctions across China, as developers that ran afoul of the central bank’s “three red lines” on debt limits ran short of capital to replenish their land banks. However, local authorities are backtracking from the draconian measures that have sent the entire country’s real estate industry into a tailspin. Last month, Shenzhen relaxed rules for companies taking part in land sales. According to the new rules laid out by the technology metropolis, more than one developer will be allowed to bid for land at the same price, as the competition will be based on how many homes they can build under the “affordable” price category. Other cities such as Beijing, Hangzhou and Guangzhou have either lowered the prices of parcels on offer in the final round of sales for the year or relaxed the rules to attract bids from cash-strapped developers facing a market downturn. HKRI last bought a site in Shanghai’s Nanjing Road West in 2002 for 1.15 billion yuan, on which it developed the HKRI Taikoo Hui mixed-use project. The new site will yield a total gross floor area of 32,528 square metres (350,130 sq ft). HKRI’s winning bid of 830.4 million yuan works out to 25,587 yuan per square metre. “The price we paid for the site still gives us room to make a profit despite the government capping the future selling prices of the flats [to be built on the plot] at about 50,000 yuan per square metre,” said Lam. The financial troubles of mainland Chinese developers certainly offers opportunities for cashed-up players including Hong Kong builders as there is less competition, said Martin Wong, head of research and consultancy of Greater China at Knight Frank. However, price and location are the main factors behind developers’ decision to bid for land, he said. HKRI to ‘embrace digital era’ in mainland expansion While the land auctions of cities across mainland China have been affected by the crisis in the country’s real estate industry, demand in Shanghai has been resilient. This has allowed the Shanghai government to avoid cutting prices or relaxing rules for the land auctions. “Developers will likely keep a watchful eye on key markets like Shanghai, which have a firm base of buyer demand and more limited supply of residential land plots,” said James Macdonald, senior director and head of China research at Savills.