Tycoon Li Ka-shing’s Cheung Kong Property Holdings has won its first government land site in four years after paying 33 per cent more than the high-end of market expectations. The Lands Department on Wednesday said the tender for the site on Lai Ping Road, in Kau To Shan near Sha Tin, was awarded to Rich View Investments, a wholly owned subsidiary of CK Property, after it made the highest bid of HK$1.953 billion. Analysts were divided over whether the move indicated the city’s wealthiest man has regained his confidence in Hong Kong after Li put a valuable asset, The Center in Central, up for sale last month with an asking price of HK$35 billion. “This land acquisition just involved HK$1.9 billion. It is an insignificant amount when compared with his sale of The Center,” said Nicole Wong, regional head of property research at CLSA. Cheung Kong puts The Center up for sale as Li Ka-shing trims Hong Kong assets She pointed out that CK Property has clearly stated it would pursue other global investments given challenges in Hong Kong’s property market. In announcing its interim results in August, CK Property said it was spreading its reach globally to find opportunities in other business areas given the challenges it faces in identifying investments with reasonable returns in the current cyclical stage of the city’s property market. “The [land] purchase is more an indicator to show CK Property is flush with cash than an issue of confidence [in Hong Kong],” said Wong, adding that the developer’s gearing ratio is just 2.5 per cent as of June 30. That compares with mainland Chinese developers with gearing ratios in the range of 50 to 100 per cent. CK Property on hunt for global opportunities to extend reach to new business areas In 2013, Li sold more than 20 billion yuan (HK$23 billion) of commercial properties in Shanghai, Beijing and Guangzhou. In Hong Kong, CK Property has seven residential developments involving about 2,000 units that are pending sale Joseph Tsang, managing director of international property consultant JLL Hong Kong, also sees no change in the company’s outlook for the city. “Cheung Kong Property has cashed in a lot through property sales. Given that the land acquisition is relatively small in terms of investment size, I don’t see the purchase as an indicator of the company’s confidence in the city’s property market,” he said, “As a developer, the company needs to replenish its land bank.” However, Thomas Lam, head of valuation and consultancy at Knight Frank, said CK Property’s aggressive bid to a certain extent reflects its confidence in Hong Kong. “CK Property has been offering new projects for sale and it’s time to replenish its land bank,” he said. In September last year, the developer successfully bid HK$2.955 billion for MTR Corp’s Lohas Park phase eight. CK Property wins last waterfront site at Lohas Park, regaining foothold for the first time in eight years The sale price of the Kau To Shan site was 33 per cent higher than the HK$1.22 billion to HK$1.46 billion range forecast by surveyors. The price tag represents a land cost of HK$8,001 per square foot and the site will yield a total gross floor area of 244,093 sq ft. CK Property had outbid 17 other developers when the tender closed on Friday. Lam expects the winning developer would need to invest a total of HK$4 billion, including land cost. Taking into account construction costs and interest expenses, he believes the units would need to be sold for HK$20,000 per square foot in order to make a reasonable profit. Other bidders for the site included Sun Hung Kai Properties, Wheelock Properties and a joint venture formed by Vanke Property (Overseas), a unit of the mainland’s largest developer China Vanke, and Asia Cassava Resources Holdings. CK Property executive director Grace Woo Chia-ching said the firm actively participates in government land sales. “We are glad that we won this site which is located in a traditional luxury residential area with attractive views. The initial plan for the site, the best in the area, will include villas and multi-storey residential blocks to meet different demands of our targeted customers,” she said.