A Hong Kong tycoon has paid US$3 billion for a prime commercial lot, a city record according to analysts, as costs in one of the world's most expensive metropolises continue to soar.

The price tag -- which works out at around $1 million per square metre -- for the rare plot of land in Hong Kong's bustling Central district can partly be explained by fierce competition for premium space, said Jackson Wong, of Huarong International Securities.

"It is pretty crazy," he said of the sum paid for the land, currently occupied by a multi-storey car park.

Wong said it was a commercial land sales record and would be seen as a yardstick for future deals.

"However this kind of supply is once in a blue moon," he added.

Property has become a political issue in Hong Kong, where as small businesses are forced to close due to sky-high rents and many residents cannot afford to buy or rent decent homes.

Commercial and residential property prices have been fuelled by an influx of money from wealthy mainland Chinese investors and developers.

Critics also accuse the government of having close ties with developers.

The 2,880 square-metres (31,000 square-feet) plot in Central was sold off by the government to Henderson Land, owned by the city's second richest man, Lee Shau-kee, late Tuesday.

It was the first premium commercial lot to come up in Central since 1996 -- the year before Hong Kong was handed back to China by Britain.

The eight other bidders included the city's richest man Li Ka-shing and one mainland Chinese firm, according to a government statement.

Henderson Land said it would develop the site into an office building with retail facilities, expected to be completed around 2022.

"The company is optimistic of the long term prospect of this investment," it said of the HK$23.28 billion purchase in a filing to the Hong Kong stock exchange.

Property group CBRE said the sale was the first for a commercial site in Central in the past two decades.

The group also said in March the district was home to the world's highest priced office market, with rentals of US$264.27 per square feet per annum, ahead of Beijing's Finance Street, London's West End and Midtown Manhattan in New York.

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CBRE GROUP

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