May 15, 2018 / 12:22 PM / 10 months ago

UPDATE 1-Hong Kong's Sun Hung Kai Properties bags 'land king' at record price

(Adds details, background)

HONG KONG, May 15 (Reuters) - Sun Hung Kai Properties Ltd set a land sale record in Hong Kong on Tuesday when it outbid four others and snapped up a residential plot northeast of the city’s iconic Victoria Harbour for HK$25.16 billion ($3.21 billion), the Lands Department said.

The site, now crowned the new “land king” by local media, is the most expensive land ever sold in Hong Kong by lump sum price.

Right next to it is Hong Kong’s most expensive commercial land plot, which was sold to local developer Nan Fung Development Ltd for HK$24.6 billion a year ago.

The Kai Tak district has emerged as the city’s most competitive battleground for prime land among developers.

The neighbourhood was once home to the city’s famous Kai Tak Airport where airplanes descended into a dense forest of buildings armed with neon signs.

After the overcrowded airport was closed in 1998, the land was left barren, then redeveloped and sold to developers in recent years. It is now making history in terms of land prices.

China’s HNA Group sent shockwaves in the property-obsessed city in late 2016 when it outbid local and mainland developers at nearly double the market forecast in its first land purchase in Hong Kong. It later bought three more land parcels in the same district.

The acquisition helped fuel the city’s infamously expensive property market - a government index on housing prices has been breaking records month after month since November 2016, when HNA made its first purchase.

But the aviation-to-financial services conglomerate has sold three out of its four Kai Tak sites to local developers this year.

Sun Hung Kai Properties is “very happy” about Tuesday’s victory and expects to invest a total of HK$40 billion in the project, said Deputy Managing Director Victor Lui.

“The conditions are outstanding. It can be built into a landmark residential project that includes a mall. The government will also invest a lot of resources into the Kai Tak district,” he said in a text message. “The prospect is glorious.”

SHKP’s bid also marked the most expensive price per square foot paid for land in Kai Tak, at HK$17,777. The site has a maximum gross floor area of 131,495 square metres (1.4 million sq ft)

But future land prices in Kai Tak could keep climbing, according to property consultancy Knight Frank’s Senior Director, Thomas Lam.

There are at least four more sites with full views of the Victoria Harbour that are yet to be sold, Lam said, and when asked if they could potentially break Tuesday’s record, Lam responded, “I think so.” ($1 = 7.8499 Hong Kong dollars) (Reporting by Venus Wu; Editing by Biju Dwarakanath and Subhranshu Sahu)

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