Developers submitted seven bids for the third-largest residential plot at Hong Kong's former Kai Tak airport, as April sales data showed home transactions jumping by 52.8 per cent from March, in a clear sign of the bull market's return to the world's most expensive city.

Kai Tak's Area 4C Site 2, a sliver of land sitting on the former Kai Tak runway, can yield 641,168 square feet (59,566 square metres) of gross floor area. It is valued at HK$11.5 billion (US$1.47 billion), or HK$18,000 per square foot, smashing the record set in May 2018 when Sun Hung Kai Properties paid HK$25.16 billion, or HK$17,776 per sq ft, for a mixed-purpose lot.

"The recent increase in home price has been amazingly fast," said Vincorn Consulting and Appraisal's managing director Vincent Cheung. "Developers are keen to seize land at prime locations [such as Kai Tak] so it wouldn't be a surprise at all if a new benchmark were to be set."

In land-scarce Hong Kong, developers buy plots from either the government or the city's subway operator MTR, and their bids are often a weather vane for the property market's direction. Kai Tak, offering full view of Victoria Harbour, is the epicentre of Hong Kong's race for land, where developers often outbid each other by as much as 50 per cent just to get their hands on harbourfront land to add to their order books.

Bids have returned after a lacklustre January, when Hong Kong's housing market went through a five-month price correction.

That correction reversed course amid the dovish interest rate policy by the US Federal Reserve, which compelled Hong Kong's monetary authority to mirror the same policy stance. As a result, the property bull market returned to the city, posing a stiff policy challenge to the administration of Chief Executive Carrie Lam Cheng Yuet-ngor.

Moody's Investors Service last week revised its 2019 forecast of Hong Kong's home prices to an increase of between 8 per cent and 10 per cent, compared with last November's prediction when Moody's expected home prices to drop by 15 per cent over the subsequent 12 to 18 months.

To underscore the vibrancy of the market, a total of 1,100 new apartments will go on sale on Saturday, in the city's biggest weekend launch in six years, as developers rush to meet the pent-up demand by homebuyers.

Most of Hong Kong's major developers submitted bids for the latest Kai Tak tender, including Sun Hung Kai Properties, CK Asset Holdings, K Wah International, and a consortium comprising Wheelock Properties, Chinachem Group, China Overseas Land and Investment, Henderson Land Development, New World Development with Imperium Group.

The plot is the third-largest residential parcel on the former runway, after a Henderson-Wheelock consortium paid HK$8.98 billion in March for Area 4B Site 1. The site could yield a total gross floor area of 722,060 sq ft, making it the largest single plot in the area.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

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