(Yicai Global) Oct. 17 -- Hong Kong's land market has seen its first auction failure in two and a half years after once active mainland developers withdrew their bids for the parcel, pegged to set a new price record, and local firms were unwilling to stump up enough cash.

The Lands Department of Hong Kong received five tenders for the plot on Mansfield Road, in The Peak, and rejected all of them as they did not meet the government's reserve price for the site, it said in a statement yesterday.

The bids came from Sun Hung Kai Properties, Henderson Land Development, CK Asset Holdings, K Wah International Holdings and a consortium comprising of The Wharf Holdings, New World Development and other firms. No mainland developers placed a tender for the land.

Analysts believed the plot at The Peak was the most attractive among those up for sale in the city in the third quarter. It was expected to become Hong Kong's most expensive land parcel, fetching more than HKD36 billion (USD4.6 billion), according to state-backed news site The Paper.

Hong Kong last cancelled a land parcel sale in January 2016, when it refused all offers for Yuen Long, which was eventually sold. It also turned down bids for Tsing Yi and Pak Shek Kok in 2015 and 2014, both of which also sold after being put back on the market.

Not a Lost Cause

Developers still have confidence in the plot as several were competing for it, Ta Kung Pao cited Donald Choi, chief executive at Hong Kong-based developer Chinachem, as saying.

The bidding prices proposed by the developers are influenced by the length of time it takes to sell luxury homes; the government's determination to levy a vacancy tax on empty flats, which will increase development costs; the recent China-United States trade dispute and stock market volatility, he added.

Unlike small- and medium-sized parcels, the homes to be built here will cover thousands of square feet, said Tony Wan, a director at one of the bidders, K Wah International Holdings. It is impossible for these kinds of units to sell fast, they are mostly sold as complete houses with sales taking as long as five or even ten years, he added, also pointing out that the vacancy tax would add risk to the project and impact pricing.

There should be no impact on the mass market, he added.

Editor: James Boynton