A record RMB 31 billion ($4.6 billion) joint bid from China Merchants Shekou Industrial Zone Holdings and Overseas Chinese Town won a mixed-use site at Shenzhen’s planned new convention and exhibition center in the southern Chinese city’s Bao’an district, the South China Morning Post reported.
The sum is the largest amount ever paid for land in China, easily surpassing the RMB 25.5 billion a joint venture formed by Guangzhou R&F Properties, Agile Property Holdings and Country Garden Holdings paid for the Guangzhou’s Asian Games Village site in 2009.
The record-setting bid for the 1.5 million square metre project, which includes nearly half residential space, comes after average home prices in the southern economic hub have risen more than 41 percent in the last year.
Local JV Beats Out National Champions for Mega-Project
The 50-50 joint venture won the rights to develop 528,200 square meters of land for commercial and residential purposes, as part of the 1.8 million square meter overall site for the Shenzhen International Exhibition Centre. The project, which will be one of the world’s largest exhibition spaces is planned to include a 250,000 square metre hotel, 320,000 square metres of commercial space, and nearly 700,000 square metres of apartments. The price paid works out to RMB 20,667 per square metre of GFA and earlier reports indicated that the project would be completed in 2018.
The newspaper noted that China Vanke, China Poly Real Estate and China Resources Holding also submitted bids to the Shenzhen government with Vanke believed to have offered more money than the eventual winning bid.
2016 Brings a New Era of Land Kings
It has been a record setting year for land prices in China with the Shenzen deal the latest in a string of land king transactions. Fujian-based Ronshine China Holdings earned the title in Shanghai when it paid RMB 11 billion ($1.66 billion) for a site on Zhongxing Road.
The little known developer created large headlines when it beat out 17 rival bidders for the sought after site. That deal came a few weeks after Gemdale Corp took the title of land king when they acquired a 140,252 square-meter parcel of land in Shanghai’s Pudong district for RMB 8.8 billion ($1.3 billion).
However, the title of land king is not a crown everyone wishes to wear. China Vanke and Cinda Real Estate teamed up to submit a winning bid of RMB 12.3 billion ($1.87 billion) for a plot of land in Hangzhou only for the former to back out of the deal shortly after the auction.
Sources at China’s largest developer told local media outlets that the price surpassed the internal bid ceiling Vanke had set prior to the auction. Cinda would eventually find a willing partner for the project in local developer Hangzhou Bijiang Real Estate.