Hong Kong property developers snub Qianhai FTZ land auction

Signals rising investor caution.

A heavily promoted land auction at the US$45 billion Qianhai free-trade zone (FTZ) in southern China failed to attract any of Hong Kong's powerful property developers. Only two mainland bidders showed-up.

Developer China Resources Land Ltd beat Shimao Property Holdings Ltd with a bid of US$1.8 billion for the commercial site. The auction on Aug.16 was restricted to Hong Kong-listed companies with a market value of at least US5.16 billion.

"There were Hong Kong developers who were very interested and have been in contact with us, but they dropped out in the end and we don't quite understand the situation," said Lin Hong, vice president of the Authority of Qianhai Shenzhen Hong Kong Modern Service Industrial Corporation Zone of Shenzhen.

The Qianhai project intends to build a "mini-Hong Kong" and experiment with currency convertibility. Analysts said, however, that most of the leaders in Hong Kong industry don't buy the idea of having some of their businesses located in Qianhai.

Focused on finance, logistics and IT services, the Qianhai Bay economic zone hopes to draw on Hong Kong's expertise as a hub for offshore renminbi trading as it seeks to provide the same services in renminbi, bond and equity offerings, insurance products and trade settlement.