SINO Land Co and Nan Fung Development Ltd have led a group of builders that made the better-than-expected winning bid of HK$4.55 billion (US$584 million) for a residential site in Hong Kong's Tai Po district.

Sino Land and Nan Fung will each own 35 percent of the property and USI Holdings Ltd and K Wah International Holdings Ltd will each hold 15 percent, Nan Fung spokesman Donald Choi told Bloomberg News in Hong Kong yesterday.

"We think this is a reasonable price," Choi said. "If you look at the performance of the stock market lately, it has been reaching record highs over and over again. So the price we paid was not excessive at all."

The winning bid for the 238,164-square-foot site at Pak Shek Kok is 48 percent higher than the HK$3.08-billion minimum guaranteed by Wheelock Properties Ltd when it triggered the auction last month.

The sale price is equivalent to HK$6,368 per square foot of allowable floor area, according to calculations by Centaline Property Agency Ltd.

The developers will combine the site bought yesterday with two other sites acquired earlier, Choi said. The group will invest between HK$5 billion and HK$6 billion developing a project with 1,000 residential units on the combined site, he said.

Sino, Nan Fung and K Wah jointly bought two neighboring residential sites in Tai Po at a government auction in March for a combined HK$5.6 billion. Sino has 50 percent of one project and 25 percent of the other.

A Bloomberg News survey of five analysts before the sale had an average estimate of HK$4.49 billion. The estimates ranged from HK$4.3 billion to HK$4.8 billion.

Luxury home prices in Hong Kong are rising as the city's longest economic expansion in almost a decade boosts buying power, and as wealthy investors from the Chinese mainland look across the border for property investment. Developers are looking beyond traditional higher-priced areas near the city's Central district.

"This reflects developers' confidence in the luxury residential market in the area," Buggle Lau, chief analyst at Midland Holding Ltd, a Hong Kong-based real estate agency, said in an interview.

"They're probably encouraged by strong home sales in the past few months. The potential of Chinese mainland buyers is another reason to be optimistic."

Yesterday's site is the fourth in Tai Po sold by the government this financial year. The government in March auctioned three sites in the district for a combined HK$6.15 billion.

Hong Kong was the world's fifth-most expensive city to buy luxury homes last year, according to a survey by property adviser CB Richard Ellis Inc.

The city ranked behind London, New York, Monte Carlo and Tokyo.