Two construction tycoons yesterday jointly won the bidding for a large piece of land in downtown Taipei, injecting a dose of confidence into the property market, which saw sluggish trading in the first half of the year.
Shin Kong Life Insurance Co (新光人壽), the nation’s second-largest insurer, sold the land near Da-an Forest Park to Lin Ming-hsiung (林敏雄), chairman of Yuan Lih Group (元利建設), and Tsai Tseng-yu (蔡鎮宇), board director of Cathay Financial Holding Co (國泰金控), for NT$4.8 billion (US$158 million), or 14.3 percent higher than the floor price of NT$4.2 billion.
Market analysts said the sale of the 1,180 ping (3,894m²) plot located in a residential neighborhood would benefit both parties and help boost the property marketa.
Billy Yen (顏炳立), general manager of DTZ Debenham Tie Leung International Property Advisers (戴德梁行), said he felt certain beforehand that the auction would run smoothly since the lot had been fairly priced.
Yen, whose company Shin Kong had consulted on the auction, said the deal had allowed the seller to increase liquidity as planned while leaving the buyers ample room for profit margins.
Shin Kong Life, a subsidiary of Shin Kong Financial Holding Co (新光金控), acquired the land in 2006 with a view to building upscale housing, but shifted its strategy this year in favor of commercial property that could generate rental profits, the company said in its auction announcement.
Lin and Tsai, whose businesses possess necessary capital and know-how, are expected to turn the plot into luxurious apartment units to be sold at between NT$1.3 million and NT$1.4 million per ping, Yen said. The plot sold for NT$4.07 million per ping, up from the NT$2.6 million per ping Shin Kong paid for it two years ago.
Lin also owns Hwatai Bank (華泰銀行) and Pxmart (全聯社), the nation’s biggest “hard discounter” chain. Tsai jointly purchased the land in his individual capacity but his company is tied to Cathay Life Insurance Co (國泰人壽), Cathay Securities (國泰證券), Cathay United Bank (國泰世華銀行) and other financial services providers.
Yen’s estimates would be 65 percent higher than the average price of NT$850,000 per ping in the district, but the property consultant portrayed the price as reasonable, saying it would give profit margins of between 20 percent and 30 percent.
“The auction showed that housing in a good location remains attractive,” Yen said. “Properties in suburban areas may not be as appealing, though.”
Evertrust Rehouse (永慶房屋), a leading real estate agency, said the auction had lifted morale on the property market, which saw trade of high-end housing down 16.5 percent in the second quarter of this year.
Evertrust manager Yeh Kuo-hua (葉國華) said the bearish sentiment in the market, caused by rising inflation and interest rates, could be reversed if sellers would avoid overpricing their properties.
Yeh said the market was not short of funds or buyers, but investors have turned cautious as they try to gauge the impact of improved cross-strait ties and surging fuel costs on the economy.
A wait-and-see attitude is not necessarily a bad strategy, the agent said.