Hong Kong-based property developer New World Development is set to purchase a major commercial property in mainland China for a $592 million. The purchase is the first major deal in mainland China for the heir to one of the country's largest property developers.

In a statement published on late Tuesday, New World Development said that it had won the bid to buy a 17,170 square meter plot of land in Middle Huaihai Road in Shanghai. The property is located along Shanghai's most expensive shopping area modeled after the Champs-Elysées in Paris.  

The deal is the largest purchase ever made by Adrian Cheng, the scion of the $13 billion property empire that is currently the four-largest developer in Hong Kong. Cheng was originally placed in charge of the company's mainland China operations following an internal restructuring in February. Cheng is set to be the next-generation successor to the massive property conglomerate.

The purchase represents a price tag of about 31,946 yuan per square meter. New World Development plans to develop the area, which it expects to yield a total gross floor area of 128,683 square meters. The property will be developed under the company's K11 branding.

New World Development already owns and operates several K11-branded projects in Shanghai. This includes its K11 mixed development project, which features a 37,500-square-meter mall and an 81,000-square-meter office building.        

Property analysts at Vincorn Consulting and Appraisal noted that the purchase is one of the first major property transactions for a commercial lot in the city since the start of the coronavirus outbreak. The last major purchase in the city was Hongkong Land's acquisition of a property in Shanghai's West Bund area in February for a record 31 billion yuan.

The company estimates that New World Development could spend as much as 6.9 billion yuan - including the land cost - to fully develop the property. Analysts further speculate that the developer could be taking advantage of the retail markets' speedy recovery and the rebound in consumer spending in mainland China.

New World Development currently generates about 74 percent of its annual gross profits from its businesses and projects in mainland China. The company previously stated that it plans to make further inroads into more Greater Bay Area cities as part of its long-term strategy.