Shin Kong Life acquires Taipei plots

Shin Kong Life Insurance Co (新光人壽), the nation's third-largest life insurer, yesterday outbid several land developers to acquire two residential parcels of state-owned land in downtown Taipei for NT$6.38 billion (US$197.5 million).

The bidding prices -- NT$3.37 billion for a 1,180-ping (3,901m²) plot and NT$3.01 billion for a 1,146-ping (3,789m²) plot -- exceeded the floor prices set by the Ministry of Finance by 170 percent and 176 percent, respectively.

This means the land, located on Jianguo S Road near Da-an Forest Park (大安森林公園), was acquired for NT$2.74 million per ping, the highest price ever paid in a government auction of state-owned land for residential use.

The record for the top price in a commercial-use land auction is held by Uni-President Group (統一集團), which paid NT$4.13 million per ping, or NT$12 billion in total, in 1996 to obtain a state-owned plot in Taipei's Xinyi district.

The auction held yesterday attracted attention as the bidding, originally scheduled for early January, was called off after investigators found that a postal worker was involved in helping certain property developers secure contracts.

After making changes to the bidding process, the finance ministry's National Property Bureau announced another public auction, opening up for bids yesterday.

Sixteen out of 22 deals were closed, bringing in a total of NT$7.53 billion.

"Shin Kong Life's offer surprised the market," said Victor Chang (張欣民), director of the research and development division at Sinyi Real Estate Inc (信義房屋), the nation's largest real-estate agent.

"But as this is the last square of land in the capital, and as it has garnered massive coverage from the media, it is understandable" the company decided to pay nearly triple the floor prices, he said.

The land, the site of a former army club under the Ministry of National Defense, is close to the Da-an MRT station on the Muzha Line. It faces Taipei's biggest green space, making it much sought-after by investors.

Shin Kong Life has decided to build high-end residential buildings, which will sell at NT$1 million per ping, bringing in a high return of 10 percent, said Hsu Shun-yun (徐順鋆), manager of the insurer's accounting department.

The project is expected to be completed by 2008, when construction of the Xinyi MRT line is concluded.

The deal will boost Shin Kong Life's real estate investments from the current 7 percent of working capital to account for 9 percent, he added.

Sinyi Real Estate's Chang said yesterday's result demonstrates the sense of confidence in the housing market.

"We've fine-tuned our outlook toward this year. Real-estate ... performance this year is bound to surpass that of last year," he said, adding that political factors would not affect the boom, given that it is supported partly by low interest rates.