The fate of Agora Garden (亞太會館), one of the nation's premier service apartments/hotels, remains up in the air after its owner set the minimum bid at a high NT$19.9 billion (US$654.4 million) at yesterday's auction, with only one US corporate bidder showing up.
“We were astonished at the owner’s NT$19.9 billion selling price,” Jack Qin (秦杰), president of the Los Angeles-based health-product maker EFT Biotech Holdings Inc, told a media briefing after the failed auction yesterday morning.
EFT remained confident it could close the deal after expressing a strong interest in building the company’s first luxury home project in Taiwan.
“We’d like to match the owner’s optimism and offer to pay NT$10 billion in cash right away and repay the remaining NT$9.9 billion three years later if the planned luxury home project [at the Agora Garden’s site] could be sold for NT$3.5 million to NT$4 million per ping [3.3m²],” Qin said.
The company believes Xinyi District is the best location for such a luxury home project, but it could also consider developing such a pricey project at other locations in Taiwan, he said.
Agora owner Shen Ching-ching (沈慶京) — chairman of the Core Pacific Group (威京集團), which owns two listed companies in Taiwan — has been upbeat about the nation’s emerging luxury home market in Taipei’s upscale Xinyi District since early this year.
To strengthen the group’s financial structure, Shen decided to sell Agora Garden and set the floor price at NT$6.9 billion in January. However, he delayed a proposed auction in March and raised the price to NT$14.9 billion last month as the local property market picked up. He increased the minimum bid again yesterday.
Should the deal push through, the hotel site, measuring 2,468 ping, would be worth a record NT$8 million per ping.
The deal’s auctioneer, real-estate consultant DTZ (戴德梁行), said yesterday that the hotel’s owner would make a final decision on Qin’s offer and conduct direct negotiations with other potential buyers.
DTZ general manager Billy Yen (顏炳立) stressed, however, that the hotel was unlikely to be sold below NT$19.9 billion.
The hotel’s general manager, Jessica Hsieh (謝美慶), also said that the likelihood of Shen accepting Qin’s offer was slim.
Hsieh said several multinational corporate buyers had offered more than NT$13 billion in cash for the hotel. However, those potential buyers didn’t show up at the auction yesterday.
Yen said the realtor would not rule out recommending another round of auctioning in the second half of this year when a clearer trend in the property market emerges.
Several academics have warned of an emerging asset bubble in Taipei, but Qin shrugged off those concerns, saying he was optimistic amid signs of warming relations with China.
He said that opportunities in the US market were slim as it was experiencing a slowdown.
As for China, land developers are only allowed in second-tier Chinese cities, which are not suitable for luxury home projects, he said.
A Citigroup analyst said the failed auction of Agora Garden could be negative for the property market in the short term.
“We expect the deal to be handled via private negotiations to avoid more embarrassment. Considering the response so far, no potential buyer is likely to pay more than NT$14.9 billion, not to mention NT$19.9 billion,” Andre Chang (張致竑), an analyst at Citi Investment Research in Taipei, wrote in a client note yesterday.
Chang expects the deal to be closed at a price of between NT$12.5 billion and NT$15 billion.
“Any prices in this range should be considered neutral to slightly positive for the property market, while any prices below would be negative,” the research analyst wrote.
ADDITIONAL REPORTING BY KEVIN CHEN
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