CR Land still eyeing Hong Kong sites despite inflated prices, says parent group’s chairman

State-backed China Resources Land, which has been building its presence in Hong Kong for decades, has been outbid recently on two separate government land tenders by mainland Chinese rivals.

But despite hugely inflated prices now being paid in Hong Kong, CR Land parent China Resources Group’s chairman Fu Yuning, also a CPPCC member, told the South China Morning Post during the sidelines of the two sessions in Beijing that its interest in acquiring more land in the city remained strong.

Various local builders have been outbid on several prime land deals by mainland developers in recent months.

Two mainland developers paid a record HK$16.86 billion (US$2.17 billion) late last month for a plot of residential land at Ap Lei Chau, topping market valuations by almost 50 per cent and making it Hong Kong’s most expensive lump-sum sale to date.

The buyer is a joint venture between Logan Property Holdings of Shenzhen and Guangzhou-based KWG Property Holding.

With a total gross floor area of 762,091 square feet, that price translates into HK$22,118 per square foot. Property agents expect apartments on the site to sell for at least HK$32,000 per square foot, a record for the district.

Fu said he felt prices had become “too high” but that it was still too early to say they were nearing their peak.

“The Hong Kong market has unique strengths, particularly given that it is a free economy. It is particularly attractive to mainland capital,” Fu said, adding that CR Land, which listed on the Hong Kong stock exchange in 1996, would continue to make moves but would only pay what it considered reasonable.

CR Land was one of the 15 developers that submitted bids on a government tender for the latest residential land parcel in Kai Tak, the site of the old Hong Kong airport, which closed at midday on Friday.

Surveyors projected the site, Kai Tak Area 1L Site 2, could fetch HK$6.1 billion to HK$7.4 billion, or HK$10,000 to HK$13,500 per square foot.

“Mainland developers that have already bought land in Kai Tak will bid aggressively,” Centaline Surveyors director James Cheung King-tat said.

Sun Hung Kai Properties, Cheung Kong Property Holdings, Henderson Land Development, Wheelock, Chinachem Group and K Wah International also submitted bids for the site.

Mainland bidders included CR Land itself, China Overseas Land & Investment and Vanke Property (Overseas).

New World Development teamed up with China Merchants Land, while Chevalier International Holdings and Wang On Group put in a joint submission for the tender.

The site, which could yield a gross floor area of 551,138 sq ft, is adjacent to three other plots sold to mainland conglomerate HNA recently.

Cheung said he expected HNA to be among the bidders, too, as the company could then merge the site with its existing land holdings there to create one single huge development.