A joint venture between Sun Hung Kai Properties and Ping An Insurance has won a land parcel in Hangzhou for RMB 13.26 billion ($1.88 billion), earning the right to develop 857,700 square metres (9.23 million square feet) of commercial and residential space in the city’s Jianggan district, according to a notice by the Bureau of Planning and Natural Resources in the capital of Zhejiang province.
Together, Hong Kong’s most valuable developer and the top five mainland insurer fended off challenges from Hangzhou-based Binjiang Real Estate and Beijing Runfeng Group to make the 175,300 square metre the most expensive piece of land ever purchased by total premium in the Yangtze River Delta city. The final sale price was a 1.22 percent mark-up over the auction reserve.
The land purchase, which comes in the run-up to Hangzhou hosting the 2022 Asian Games, is the third major property investment by a top Hong Kong developer in the city within the last three months.
Developing a “Tourism Financial Complex”
The winning bid, which is equivalent to RMB 15,532 per square metre of built space, gives Sun Hung Kai and Ping An a key piece of a section of Hangzhou known as the Jianghehui complex, which is located at the confluence of the Qiantang River and the Grand Canal in the eastern part of the city of 9 million people.
The final project is approved for construction of “a world-class urban tourism financial complex” including office, retail residential and entertainment facilities. And even a ferris wheel.
The site is composed of three separate plots which are separated from the Qiantang River by the Asian Games Village, which is currently under construction. The project in what is regarded as Hangzhou’s up and coming economic and cultural centre has access to the city’s San Bao metro station, which is served by lines 6 and 9.
Sun Hung Kai is familiar with the area from having previously invested in China Resources Land’s MixC shopping centre, which is about 2.5 kilometres southwest of its latest site. The project is also in close proximity to CapitaLand’s Raffles City Hangzhou project, which was completed in in Qianjiang New Town in 2o17.
Homes in the development’s residential component, like all new condominium projects in Hangzhou, is required to sell its unfurnished residential units at an average price no higher than the government-imposed price limit of RMB 63,800 per square metre, with the maximum for a single unit capped at RMB 70,180 per square metre.
Sun Hung Kai Bets on West Lake City
Sun Hung Kai, which co-developed Hong Kong’s IFC with Henderson Land, has previously said that it plans to nearly double its China investment portfolio by 2023. The developer, which is controlled by the billionaire Kwok family, says it is ramping up its mainland investments to grow its recurring revenue base amid challenges in acquiring land in Hong Kong.
In 2005 the blue chip Hong Kong developer teamed with China Resources Land to build the MixC shopping mall, and in 2006, the pair jointly developed the high-end Foothill Residence project in the Hangzhou Zhijiang holiday resort area, neighboring the West Lake scenic zone.
The company said earlier in the year that it expects to expand its portfolio of investment properties in China to 25 million square feet by 2023 from about 13 million square feet at present.
Hong Kong Developers Head for Zhejiang Capital
As it develops its new project in Hangzhou, Sun Hung Kai may see some familiar faces from back in its home city.
In late July New World Development, one of SHK’s largest competitors in Hong Kong visited the home of e-commerce giant Alibaba and the famed West Lake long enough to sit through 11 rounds of bidding for a mixed-use site in Shangcheng district.
The developer controlled by the Cheng family won the tender with a RMB 9.792 billion bid, which gives it the right to build a 393,886 square metre project.
New World was also active in Hangzhou in May when it partnered with its homeboys from Wharf Holdings, along with mainland players China Resources Land and China Yin Tai to win a commercial plot in Hangzhou’s central business district for RMB 10.73 billion. That bid with broke a record for a commercial land sale in the city, paves the way for a 194,100 square metre development.