Henderson Land marks Lee Shau-kee departure with record-breaking purchase of 3 billion yuan residential plot in Beijing
- Plot the very first this year not to have a cap on maximum asking price
- Henderson Land’s winning bid of 69,500 yuan per square metre was 23.3 per cent higher than the starting bidding price
Hong Kong developer Henderson Land Development kicked off the post-Lee Shau-kee era with its first foray in Beijing’s residential market in 15 years, winning a 39,479 square metre plot in the Chinese capital’s Chaoyang district for 3 billion yuan (US$440 million) on Tuesday.
It is a surprise win for Henderson Land – it outbid 11 mainland Chinese companies, including Ping’an, Country Garden and Longfor, having been absent from Beijing’s land market for more than a decade. The last project it won here was in 2004, when it bought land in the city’s central business district and developed the landmark Beijing World Financial Centre.
Its winning bid of 3.02 billion yuan, or 69,500 yuan per square metre, was 23.3 per cent higher than the starting bidding price and has set the record for this area. Homes in a nearby project sold for 68,900 yuan a square metre.
At this price, Henderson Land will need to sell apartments built on the plot for at least 100,000 yuan per square metre to make a profit, analysts said.
Guo Yi, chief analyst at marketing firm Heshuo Institute, however, said the developer’s asking prices could be even higher if it can increase the underground section of any building that comes up on the plot, lowering the average price of the project as well as adding value to the project.
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“The underground portion usually is much cheaper at about 30,000 yuan per square metre. And if there is a sizeable underground portion, the aboveground portion can be sold for more,” she said.
Beijing imposes a cap on selling prices for most of the land in the city to ensure there are no big increases in the average home price. But the land bought by Henderson Land is the very first this year not to have a cap on maximum asking prices, another reason why it was so expensive and the competition intense.
Analysts, however, said Henderson Land was not fully free to price apartments built on this plot as it still needed to secure permission to sell them.
“This is the first plot sold in Beijing in recent years that doesn’t impose a price cap. All eyes are on it, so [the project] can’t be sold for conspicuously high prices,” said Zhang Dawei, head of research at Centaline Property. “[However,] a well-known developer from Hong Kong will ensure the project’s high quality.”
Another three plots of land were sold in Beijing on Tuesday, netting the city’s government 9.72 billion yuan along with the Henderson Land plot.
The Hong Kong developer held a total of 2.97 million square metres in various development projects in 13 mainland Chinese cities as of the end of 2018. Of these, 71 per cent were residential, according to its annual report. It also owns 594,000 square metres in rental properties in Beijing, Shanghai, Shenzhen and Guangzhou.
