Property auction nets just eight sales

"The asking prices of those non-performing collateral set by banks are too high to attract buyers."

Billy Yen, general manager of DTZ Debenham Tie Leung International Property Advisers

The first auction of commercial properties in the greater Taipei and Taoyuan area yesterday yielded a less-than-satisfactory outcome, liquidating NT$73.4 million out of deals with a minimum asking price of NT$350 million in total.

Only deals were closed among the 22 units up for auction, priced between NT$2.51 million and NT$100 million, with a 36 percent closing rate, according to the auction's organizer, DTZ Debenham Tie Leung International Property Advisers (戴德梁行).

"The asking prices of those non-performing collateral set by banks are too high to attract buyers," DTZ general manager Billy Yen (顏炳立) said, adding that banks rejected the organizer's advice and insisted on higher asking prices.

Among the eight deals that were closed, three were closed at their asking price, which were NT$12 million, NT$16.8 million and NT$6 million.

Those prices were between 27 percent and 41 percent lower than the market price.

One for the small number of sales was that the quality of some of the non-performing collateral was unattractive, Yen said.

But he expressed satisfaction with the auction, saying it was good enough for a trial run.

"Bidders were very zealous in putting down their bids, which heated up the auction," he said.

A total of 32 bidders showed up yesterday.

Another estate broker was bullish about the commercial property market, saying that rentals have hit their lowest point.

"Rentals of office buildings [in Taipei] have bottomed out and begun to gain momentum to re-bound," Cynthia Chu (朱幸而), director of DTZ's occupier services group, said at a briefing before the auction.

She said that monthly rentals of premium office buildings in Taipei's five major commercial districts averaged NT$2,100 per ping.

"The rental fluctuation has stabilized and may gradually rise by the year's end," Chu said, adding that rentals are unlikely to drop any more.

Store in Taipei's six major shopping districts are also on the rise depending on the locations.

"Rentals of stores located at Chunghsiao East Road Section 4 have soared to NT$14,000 per ping per month," Chu said.

Factory office complexes are also popular in the greater Taipei area than elsewhere since prices fell from NT$1,700 in 1999 to the current NT$1,200 per ping, Chu said.

"Several foreign and local logistics enterprises are looking for plots that can house ware-houses up to 30,000 ping in size," she said.

Given fact the demand is picking up and the prices remain low, there's little room for bargaining between buyers and sellers, Chu said, adding that many businesses, which leased their offices, may consider buying properties due to the low interest rates.

Chu the property market in the next few months may benefit sellers more than buyers.

The commercial property market is expected to benefit from the new Real Estate-backed Securitization Law (不動產證券化法) since commercial buildings, which generate fixed cash incomes, are prized by investors.

Yen said that the property market should recover soon since many asset management companies are getting ready to release deals by the year's end.