Hong Kong’s government fetched a record HK$42 billion ($5 billion) for a plot of land, a sale coming in at the lower end of estimates after the financial hub has been rocked by six months of pro-democracy protests.

A tender for the site, which sits atop the high-speed railway station in Kowloon that connects to mainland China’s urban hubs, was won by Sun Hung Kai Properties Ltd., the city said late Wednesday. The plot is expected to yield 294,000 square meters (3.2 million square feet) of floor area with offices, a luxury hotel as well as retail space. It’s adjacent to Hong Kong’s tallest building, the International Commerce Centre, also owned by Sun Hung Kai, a firm controlled by the billionaire Kwok family.

The price far surpasses the previous land record of $3.2 billion paid for a residential site in Kai Tak in 2018. Analysts had valued the Kowloon plot in a range of $4 billion to $12 billion ahead of the auction.

The plot is adjacent to the Hong Kong International Commerce Centre. (Source: FMT)

“The site will house offices, a hotel and a mall, which will be highly exposed to social movements and the city’s economy in the future,” said Thomas Lam, an executive director at Knight Frank LLP. “Developers had to consider this when making their offers.”

Sun Hung Kai is interested in inviting long-term strategic investors in the development of the site, Chairman Raymond Kwok said in a statement. The completion of the project will provide the company with stable and promising rental income, he added.

After another land sale failed in September, the deal marks a partial vote of confidence in one of the world’s most expensive real estate markets amid unprecedented turmoil and provides authorities with a welcomed financial injection. Demonstrations have crippled the financial hub, driving tourists away, damaging retail trade and hotel occupancy and hurtling the economy into a recession. The city’s office market suffered its worst decline in more than a decade last month.

But turmoil subsided in the days up to Wednesday’s announcement, which also follows a district election over the weekend where pro-democracy candidates scored a landslide victory.

CK Asset Holdings Ltd. and a group formed by Chinese Estates Holdings Ltd., Henderson Land Development Co., Lifestyle International Holdings Ltd., Sino Land Co. Ltd. and Wharf Estates Ltd. also submitted bids for the site.

(Source: Bloomberg)