It is one of the most ambitious developments that Cheung Kong - the Hong Kong property flagship of tycoon Li Ka-shing - has contemplated in the mainland's commercial metropolis.

The 143,860-square-meter site in the northwestern Putuo district will be offered for sale by tender in the second half of this year, the district's head, Hu Bingzhong, said Wednesday.

Cheung Kong has been in talks with government officials about the project for almost a year, he said.

Speaking on the sidelines of the Putuo-Hong Kong Investment Fair, Hu said the three-phase project could yield a total gross floor area of 359,650 sqm when completed in 2008.

The site is located next to a big park in the Changfeng ``ecological'' business quarter, one of five main zones in Putuo.

Neither Cheung Kong nor Shanghai Forte, the city's largest publicly traded developer, was available for comment.

Ji Qichun, general manager of state-owned Shanghai Changfeng Property and executive vice-director of planning and construction for the Changfeng quarter, said the company to beat could well be Shimao Group, controlled by Shanghai property tycoon Hui Wing-mau.

``Shimao is a potential bidder for the project. Its land-use proposal was even better than those of other possible bidders, including Cheung Kong,'' Ji said.

Shimao has named the project ``Shanghai 2009'' and proposed that it includes an underground city with a gross floor area of about 200,000 sqm.

Ji said the site could fetch about 90 million yuan per hectare - about 40 percent cheaper than comparable locations in downtown Shanghai, where land is the most expensive in China.

Ji said he did not believe the macro-economic control measures launched by Beijing to rein in property development, among other industries, would hamper the project since the government was mainly concerned about an overheated residential market.

He said Cheung Kong has also indicated interest in undertaking a similar project in Putuo's Zhenru Auxiliary Urban Center.

Shanghai Forte president Fan Wei said the company has sufficient capital to fund its expansion plans.

It hopes to pick up land at bargain prices from other developers that are in distress as a result of tighter credit, he said.

Forte, which builds mostly mid-priced flats, has been actively developing markets outside Shanghai, including Beijing.

Fan said Shanghai will generate about 70 percent of the company's revenue for the next year or two, but its share will decline to about 50 percent as projects in other cities come on line.

If Shanghai prices remain high, Forte expects to maintain gross profit margins of 35 percent or more on apartments available for sale this year.

Its current saleable stock of 800,000 sqm of gross floor area was built on cheaper land the company acquired a few years ago.

Fan said residential property remained in short supply in Shanghai, despite fast-rising prices. olivia.chung@singtaonewscorp.com

raymond.wang@singtaonewscorp.com