The price wasn’t disclosed but Knight Frank LLP estimated the value at HK$36.1 billion ($4.6 billion). It was CK’s first victory in a public land tender in two years.
Thursday’s deal shows the firm isn’t giving up on Hong Kong property after the younger Li took the helm in May, according to Nicole Wong, regional head of property research at CLSA Ltd. That’s despite CK running down its land bank for years. The purchase comes as runaway prices for residential and commercial properties stoke bubble fears in one of the world’s least affordable cities.
“Their current land bank will run out in 2020,” said Wong. “It’s decision time for them as whether they want to stay, and they decided to stay.”
The move contrasts with CK selling assets like The Center, the city’s most expensive office tower, and pushing money into properties abroad, such as UBS Group AG.’s headquarters in London.
The site atop MTR Corp.’s Wong Chuk Hang subway station will feature residential units and a shopping mall. It attracted bids from Hong Kong developers including Sun Hung Kai Properties Ltd., Henderson Land Development Co., and Chinachem Group Ltd., according to the South China Morning Post. The only mainland firm to show up, China Overseas Land & Investment Ltd., was a member of a consortium.
That limited mainland interest contrasted with strong demand in the past.
“Mainland Chinese developers have purchased a lot of land plots in Hong Kong for the past two years,” said Thomas Lam, a senior director at Knight Frank. “They won’t pay high prices for land anymore until they get cash from the sale of flats in the next two years.”