The price also broke the previous record for a site in Kwun Tong, which was sold for HK$5.8 billion, or HK$6,630 per square foot, to a joint venture between Link Real Estate Investment Trust and Nan Fung Development in 2015.

However, the price Lifestyle paid was in the middle of a range of market expectations of HK$6.58 billion to HK$8.78 billion.

“The site is designated for an iconic twin-tower project in the area that will become part of the city’s second core business district,” said Vincent Cheung Kiu-cho, the executive director of valuation and advisory services for Asia at Colliers International.

Cheung also said the site could yield a gross floor area of 1.09 million square feet.

Together with construction costs and interest expenses, he said the development could cost HK$14 billion.

Poon Fuk-chuen, the finance director of Lifestyle, said the company had been looking for a site in Kowloon for the expansion of its department store business.

“Besides Sogo department store, we will also bring in other commercial, entertainment and dining facilities in the proposed development,” Poon said, without disclosing the total investment cost.

Lifestyle operates the Sogo department stores in Causeway Bay and Tsim Sha Tsui.

The company is headed by Thomas Lau Luen-hung, who holds a 51.69 per cent stake.

Qatar Investment Authority, one of the world’s most aggressive sovereign wealth funds, owns 23.05 per cent.

The Kai Tak site was the first successfully acquired by Lifestyle in a government tender, a company spokesman said.

Cheung said one of the twin towers could be developed into a mall with entertainment and dining facilities, while the other would be grade A offices.

The accessibility of the area would be increased as the site was close to the proposed Kai Tak Station for the Sha Tin to Central link, he said.

“The site failed to break the high end of market expectations probably because of a lack of interest from mainland bidders,” Cheung said.

Among the eight bidders, China Overseas Land & Investment was the only mainland company competing on its own.

Participation was also seen from top-tier local property companies Cheung Kong Property Holdings and Sun Hung Kai Properties.

Mainland firm Shimao Property Holdings also took part in the bid but it was through a consortium with Sino Land and New World Development.

Thomas Lam, a senior director at Knight Frank, said the long payback period might be the reason the winning bid was lower than expected as the proposed development would be leased instead of sold.

“It is a good price for the winner as the area has vast potential for development in future,” Lam said.