China Mobile, the world’s largest wireless network operator, has agreed to pay a record price for a parcel of industrial land in Hong Kong to outbid a handful of Hong Kong tycoons, possibly signalling the return of powerful mainland buyers to the city’s property market. The telecommunications group offered HK$5.6 billion (US$722.6 million) for the 98,792-square foot (9,178 square metres) site in Sha Tin, New Territories with a 50-year lease, according to tender results published by the Lands Department late Wednesday. The plot is also the biggest piece to come to the market since 1998, according to surveyor CHFT Advisory and Appraisal. At HK$5,967 per square foot, the price tag surpassed the previous record of HK$3,617 psf for a Fanling industrial site in 2018, according to government land sale records. It also exceeded the HK$2.35 billion to HK$3.75 billion range estimated by property analysts before the tender. “The winning price reflects the hunger for industrial land among developers and corporations,” said Thomas Lam, executive director at Knight Frank property consultancy, who expects the winner to use the land for high-end logistics or data centre. “The government should offer more supply [of industrial land] in future to meet market demand, otherwise prices will further increase.” The China Mobile transaction heralds the first big bet by a mainland company since the city adopted the controversial security law on June 30 to help quell months of anti-government protests. Before the unrest and US-China trade war in 2018, mainland corporations and tycoons helped drive prices through the roof, turning Hong Kong into the world’s most expensive office and residential markets. “With greater stability and [encouragement] from the Chinese government, mainland companies can definitely be expected to increase their presence,” said Alex Leung, a senior director at CHFT. In terms of business, [the law] “ is really the final say. They see things have settled and the previous disputes have gone away. They will come for business.” China Mobile, through its unit CMCC Infrastructure Holdings, outmuscled eight competitors for the Sha Tin site. They included units owned by Li Ka-shing’s CK Asset Holdings, the Kwok family’s Sun Hung Kai Properties, and Joseph Lau’s Chinese Estates Holdings. Singapore’s state-controlled Mapletree Investments Pte was also among the losers. The telco did not immediately reply to an email seeking comment. China Mobile, with HK$1.15 trillion of market capitalisation, counted 950 million mobile customers and 187 million broadband customers at the end of 2019. Its revenue amounted to 745.9 billion yuan (US$106.5 billion) while cash and bank balances was 307 billion yuan. Hong Kong data centres represent a good investment opportunity, as demand for data grows amid lockdown measures, 5G roll-out Hong Kong may be facing a shortage of data centres in the coming years, according to Hannah Jeong, head of valuation and advisory at Colliers International. Only 1.8 million sq ft are expected to come to the market over the next three years, and all of them are either pre-leased or owner-occupied, she said. “The market is much in need for more data centres for Hong Kong,” she said. “As the Lands Department charges a significantly high premium [for adding data centre use to pure industrial land], the price for data centre development has gone up sharply over the last three years.” Companies providing cloud computing services, such as AWS, Alibaba Cloud, and Microsoft, grew more than half in 2019 from a year earlier, driving such demand, she added. China Mobile itself has built major data centres in London and Singapore in 2019, according to its website. The rolling out of fifth-generation telecommunications services in Hong Kong is also expected to fuel data consumption and underpin that demand, she added. “The shift in spending patterns to online consumption suggests a greater need for industrial space for data centres,” said Samuel Lai, senior director of advisory and transaction services for industrial at CBRE. That could be one reason why industrial properties have fared better than other segments this year, he added. Capital values of industrial properties fell the least, by only 5.9 per cent in the first half of 2020, due mainly to the sustained investment demand for properties suitable for redevelopment, CBRE data shows.