A consortium including Sino Land Co. paid a record HK$17.3 billion ($3 billion) for a plot of residential land in Hong Kong, signaling the property market is still running hot.

Shimao Property Holdings Ltd., Wheelock Properties Ltd., K Wah International Holdings Ltd. and SEA Holdings Ltd. were the other members of the group, the Lands Department said in a statement late Wednesday. The group beat out nine other bidders, including Sun Hung Kai Properties Ltd. and New World Development Co.

Hong Kong’s residential property market, the world’s most expensive, continues to hit fresh highs even as cracks start to appear in the outlook for prices amid rising interest rates.

Housing in the Cheung Sha Wan area of Kowloon
(Photographer: Xaume Olleros/Bloomberg)

Commercial property, where Hong Kong rents are the highest in the world, is also in demand. A Chinese state firm this month led the record HK$40.2 billion acquisition of a 75 percent stake in The Center, a 346-meter skyscraper, from Li Ka-shing’s CK Asset Holdings Ltd.

The site sold yesterday at Cheung Sha Wan in Kowloon has a maximum floor area of 91,770 square meters, the lands department said. The price is a record for residential land, surpassing the HK$16.9 billion paid for a site in Ap Lei Chau in February.

At a land cost price of HK$17,500 per square foot, the implied selling price when the development is completed in three or four years would range from $30,000 to $33,000 per square foot, said Raymond Cheng, director of Hong Kong and China property research at CIMB Securities Ltd.

Price Range

The market was expecting a price between HK$14,000 and HK$18,000 per square foot, he said, noting that the winning bid was on the high side because the larger consortium, with five members, could bid more aggressively.

Though the Cheung Sha Wan site is a record for a lump sum purchase of government land, the square foot cost was far lower than the HK$22,118 paid by two mainland companies, Logan Property Holdings and KWG Property Holding for the Ap Lei Chau site, he said.

The Cheung Sha Wan project has ocean views and is adjacent to the West Kowloon district where the government is building a multi-billion dollar museum complex and high-speed rail terminus connecting Hong Kong to China.

— With assistance by Jasmine Wang

This story, written by Paul Panckhurst and Frederik Balfour for Bloomberg, first appeared on Nov 15.