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Mainland free-trade zone auction fails to attract top HK developers
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A MUCH-hyped land auction in a developing free-trade zone in south China failed to attract any of Hong Kong’s powerful property developers, signaling growing investor caution toward the ambitious US$45 billion project.
More than 50 journalists vastly outnumbered the two mainland bidders present yesterday, with developer China Resources Land Ltd beating Shimao Property Holdings Ltd with a bid of 10.9 billion yuan (US$1.8 billion) for the commercial site in the southern boom town of Shenzhen.
The auction was restricted to Hong Kong-listed companies with a market value of at least HK$40 billion (US$5.16 billion), according to the land sale document.
“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 Industry Cooperation Zone of Shenzhen.
More than a year after China unveiled details of the Qianhai project to build a “mini-Hong Kong” and experiment with currency convertibility, scant details on benefits and services have left some potential investors scratching their heads.
“It’s a strange time because most of the people in the Hong Kong industry don’t buy the idea of having some of their businesses located there,” said Li Wanxin, a public policy professor at City University of Hong Kong.
Focused on finance, logistics and IT services, the Qianhai Bay economic zone hopes to draw on Hong Kong’s expertise as a hub for the yuan, or offshore yuan, as it seeks to provide the same services in yuan, bond and equity offerings, insurance products and trade settlement.
The Qianhai zone, a barren stretch of reclaimed land near the Hong Kong border, is offering preferential tax rates and other incentives to lure companies there.
Indeed, the proposed US$45 billion zone had attracted 1,144 companies with registered capital reaching 140 billion yuan (US$23 billion) as of July 19. Among them, financial institutions accounted for 73 percent and included HSBC and UBS.
Qianhai’s problem is that it is no longer the only horse in the race. Since it revealed its desire to become a free-trade pilot zone, other cities, including Shanghai, announced their own plans. Hong Kong’s premier status as an offshore yuan hub has also raised questions on what Qianhai’s value proposition would be in the long term.
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