(Yicai) June 8 -- First-tier Chinese city of Shenzhen saw a record price paid for a parcel of land at its latest auction.

The rights to develop the plot in downtown Nanshan district were sold for CNY5.8 billion (USD850 million) on June 5, setting a record of 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 will likely significantly boost land prices in the surrounding areas of Nanshan, reinforcing market expectations for the value of luxury properties in the Shenzhen Bay Area, Sun Hongmei, senior analyst at China Index Academy's local branch, told Yicai.

The land parcel has a planned construction area of around 53,100 sqm, with a plot ratio required to stay below 2.9 and a building height capped at under 100 meters, marking a departure from the typically high plot ratios of residential projects in the area.

"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 will 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 will also heat up interest in the two high-profile residential plots in Shenzhen's Qianhai and Baoan districts scheduled for auction later this month, Sun said. It will help strengthen investors' expectations regarding the value resilience of quality assets in the city's core areas and become a highly symbolic sign for the strengthening of the local land market this year, Sun added.

The exceptionally high premium and record-high price further reflect the differentiated state of the Shenzhen land market, Sun pointed out. Competition for low-density residential land in core areas has reached an extraordinarily intense level, while that for ordinary plots on the outskirts of the city remains relatively calm, Sun said.

Editors: Tang Shihua, Martin Kadiev