Sun Hung Kai Properties (0016) has captured the crown as Hong Kong's new "land king" with its record HK$25.1 billion acquisition of a Kai Tak development site.
But why would it be willing to pay such a high price? A developer's goal is to make reasonable profit through selling flats, amid price stability in the real estate market, and in this sense, in this day of sky-high prices and associated investment risks, no-one really wants to be Hong Kong's Land King.
Kai Tak sites have accounted for the major supply of residential units in recent years, since China Overseas Land (0688) won the first site in 2013 for HK$2.2 billion, or only HK$5,428 per square foot in terms of gross floor area. For the past two years, China's HNA Group had been the biggest land buyer in Kai Tak, snapping up four sites with per sq ft prices soaring to HK$13,000.
SHKP's purchase of the 1.42 million square foot parcel close to the Kai Tak MTR station translates into a per sq ft price of HK$17,776.
Industry watchers are wondering why the SHKP bid so aggressively - contrary to its conservative image in the past.
Special purchaser - a term in economics that reflects a particular buyer, for whom a particular asset has special value because of advantages offered by its ownership - could be one of the reasons.
For example, K Wah International (0173) wanted the Anderson Road Quarry site dearly, as it had operated quarry businesses at the site for some half a century. Although K Wah failed to win the site, it could have been deemed a special purchaser. SHKP probably can also be seen as a special purchaser.
For instance, HNA, which suffered from liquidity risks recently, has been unloading trophy assets globally, including several Kai Tak sites. SHKP reportedly was interested in buying one of the land parcels, but price negotiations failed.
Henderson Land (0012) and Wheelock Properties purchased sites from HNA in February and March respectively - relatively cheaply, at about HK$15,000 per sq ft, compared to the latest record price paid by SHKP, which may regret failing in its earlier negotiations with HNA.
Yet, the government is not bound to reveal the amounts of the four other competing bidders - otherwise that would allow us to compare how much more SHKP ended up shelling out.