(Bloomberg) -- A bidding frenzy followed by a record price for a piece of commercial land in China is another sign that Hong Kong developers are pushing into the mainland.
Hang Lung Properties Ltd. paid 10.7 billion yuan ($1.7 billion) for a prime plot in southern Hangzhou, more than double the asking price after a seven-hour competition on Monday featuring 336 bids. That’s a record price tag in the burgeoning regional hub, according to Cushman & Wakefield Inc. Even across China, the unit cost of 55,285 yuan per square meter ($800 per square foot) is “unprecedented” for a commercial land parcel, said Yang Kewei, Shanghai-based research director at China Real Estate Information Corp.
“There is not much room for further expansion in commercial real estate in Hong Kong,” said Harris Tong, Hangzhou-based general manager at Cushman & Wakefield. “So a pivot to China is a natural strategic move for some.”
While China is restricting foreign purchases of residential properties, high prices for commercial land have been rare. However, that’s changing amid the scarcity of commercial land in Hong Kong where prices are among the highest in the world.
Tong was expecting the property in the central Wulin district to go for as much as 60 percent more than the asking price, much lower than the eventual 119 percent premium. Bidding boiled down to Hang Lung and another Hong Kong-based rival Wharf Holdings Ltd., he said. In January, Hongkong Land Holdings bought its second parcel in Nanjing for 4.8 billion yuan.
With a total investment at around 19 billion yuan, Hang Lung plans to develop a commercial mixed-use complex, including a high-end shopping mall and offices, at the site, the company said in an emailed statement. The project is Hang Lung’s 11th in China.
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