Shanghai Land Plot Sold for Record Price

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Sun Hung Kai Properties purchased a commercial plot during an auction in Shanghai yesterday for 21.8 billion yuan ($3.6 billion), a record high for the city.

Sun Hung Kai, Hong Kong's biggest developer, beat out several bidders for the Xu Jia Hui Centre Project site, described in a company announcement as the "largest and last prime site in the city center." Located in the Xuhui District, Shanghai's commercial core, the project will be close to the Xu Jia Hui metro station. 

"The Xu Jia Hui site is in a premium location with great development potential," SHKP chairman and managing director Thomas Kwok said in the release. "We are very pleased to win the project...we are committed to high-quality developments and have extensive experience in producing large integrated projects in Hong Kong and on the mainland."

The project will have a total site area of more than 1.06 million square feet and a total gross floor area above ground of approximately 6.28 million square feet. The developer has tentative plans for a commercial complex with 70 percent premium offices and 30 percent for retail and hotel use. 

Sun Hung Kai currently has 72.8 million square feet under development in Mainland China and 9.5 million square feet of completed investment properties in the mainland, according to the company website. 

The land acquisition is in line with the developer's investment strategy in prime mainland cities. The group earned widespread recognition from two integrated projects, according to the statement. 

"Office and mall leasing at Shanghai IFC and Shanghai ICC have been exceptional and the Shanghai IFC mall and the iAPM mall are opening in stages with satisfactory performance in traffic and turnover," SHKP chairman and managing director Raymond Kwok said in the release. "The project is expected to contribute to the group's stable recurring income and further strengthen its position and brand in the mainland market."

Land prices have been skyrocketing throughout China, despite concerns that the property market may have peaked. A residential plot sold at Beijing auction earlier this week for 2.1 billion yuan, the maximum price set by authorities, according to Reuters. Sunac China Holdings beat seven bidders for the residential plot, paying 73,000 yuan a square meter.