(Yicai) June 8 -- A land auction in Shenzhen has set a new all-time high price for a plot sold in the city for housing development, underscoring the appetite among developers for prime sites in China’s first-tier property markets.

The rights to develop the plot in downtown Nanshan district were sold for CNY5.8 billion (USD850 million) on June 5, a record CNY108,600 (USD16,009) per square meter. Poly Property Group won after 290 rounds of bidding, paying a 151 percent premium.

The previous record of CNY84,200 (USD12,412) per sqm was set last year.

The record-breaking price should raise land price expectations in surrounding parts of Nanshan and reinforce those for luxury property values in the wider Shenzhen Bay area, Sun Hongmei, senior analyst at China Index Academy's local branch, told Yicai.

The plot has a planned construction area of about 53,100 sqm, with a plot ratio below 2.9 and a building height limit under 100 meters, making it notably lower density than the area’s usual high-density residential projects.

“This land parcel is the first low-density residential plot to be publicly auctioned in the Shenzhen Hi-Tech Industrial Park in nearly a decade,” Sun pointed out. “It’ll be used to meet demand for improved living conditions for tens of thousands of high-net-worth individuals in the region's high-tech industry, making it an extremely scarce land resource.

“The entry of this project into the market will help address the supply shortfall of low-density residential properties in the area,” Sun noted.

The high premium paid will also heat up interest in two high-profile residential plots in Shenzhen's Qianhai and Baoan districts scheduled for auction later this month, Sun said, reinforcing investor confidence in the resilience of premium assets in the city’s core districts and serving as a clear signal for a stronger Shenzhen land market this year.

The extremely high premium and record price further underscore a sharply divided market in Shenzhen, Sun pointed out. Competition for low-density residential land in prime areas has reached an extraordinarily intense level, while that for ordinary plots in outlying districts remains comparatively subdued, Sun said.

Editors: Tang Shihua, Martin Kadiev