Hong Kong's New World Development and Chinese state-backed China Resources Land said they will jointly build a $1.3 billion housing project in the financial city's "Northern Metropolis" next year.

In a joint statement on Wednesday, the two developers said the project will create around 1,800 homes in the Hong Kong government-led property development on the border with China.

The project has an estimated market valuation of HK$10 billion ($1.28 billion), a source close to the companies said.

The Hong Kong government first unveiled plans for the Northern Metropolis in 2021, aiming to provide homes for around 2.5 million people in a bid to ease a chronic housing shortage, and create a new business district.

China Resources Land signed agreements last year with four Hong Kong peers, including New World, Henderson Land, K Wah International and Shun Tak Holdings to study cooperation on projects in the Greater Bay Area, a Chinese government initiative to link nine cities around the mouth of the Pearl river.

An official of China's Liaison Office, Beijing's main representative office in the city, was present at a signing ceremony for the joint project, according to the statement.

($1 = 7.8113 Hong Kong dollars) (Reporting by Clare Jim; Editing by Kirsten Donovan)