Huaku Development Co (華固建設), which led local construction firms for the first six months at NT$6.29 earnings per share, plans to develop a NT$10 billion (US$312 million) project in Taipei’s Neihu District (內湖), a company executive said yesterday.
Scheduled to be completed by 2011, the development project on a 3,800-ping (1.2 hectares) plot of land would comprise two 12-story corporate office buildings, one building designed for small office and home office workers and two residential buildings, said Carson Hung (洪嘉昇), general manager of Huaku’s sales department.
The project is part of the Taipei City Government’s urban development plan and Huaku will submit its proposal next year for a two-week review and final approval, he said.
Huaku is also offering to pay for an artistically designed bridge worth approximately NT$100 million to connect the project and a nearby park, in return for the city relaxing regulations to allow the company to maximize the floor space it can sell, Hung said.
“Given the city’s tight supply of office space, we’re pretty confident about the project,” Hung said yesterday by telephone.
Upon completion, the project will release more than 20,000 ping of floor space in Taipei, 70 percent of which will be used for offices and retail, at an estimated price of NT$400,000 to NT$450,000 per ping, he said.
Huaku bought the plot of land in Neihu for NT$2 billion earlier this year.
The project will be the fourth application to the city government after Chinatrust Financial Holding Co (中信金控) and Yihwa International Corp (宜華國際), a subsidiary of The Sherwood Taipei, received approval to build a headquarters in Nangang (南港) and a 31-story five-star hotel with a shopping mall in Dazhi (大直) respectively, according to city government official Chen Hsin-liang (陳信良).
Details of the third application, from Shihlin Paper Corp (士林紙業), have not been released as the proposal is being revised, Chen said.
Huaku has seen sales of residential properties slow in recent months and Hung said the company was “cautiously optimistic” about the local real-estate market because “the global housing market is just going through a correction period.”
On Thursday, Huaku chairman Chung Jung-chang (鍾榮昌) said the downturn in the local market would extend into next year and said the company would reduce its housing projects and hold more cash.
To boost the real estate market, the Cabinet on Thursday said it would provide NT$200 billion in preferential loans and raise the government’s mortgage subsidy rate from 0.125 percent to 0.7 percent.
This announcement, however, failed to improve market sentiment, with the building material and construction sub-index — which reflects the performance of the real estate sector — falling 2.34 percent yesterday, compared with an increase of 0.94 percent on the benchmark TAIEX.
Hung said yesterday he was not very optimistic about the Cabinet’s preferential loans plan and its impact on the Taipei market.
“Such loans are of limited help, since new homes in Taipei cost at least NT$15 million each,” he said.
Hung urged the Cabinet to draw up a plan and said banks should relax their loan-to-value ratio to more than 80 percent when granting mortgages, which he said would offer a strong incentive to home buyers.
Shares of Huaku dropped 6.85 percent to close at NT$48.25 yesterday.
The firm’s stocks have retreated by 65.9 percent from this year’s intraday high, when they traded at NT$141.5 on April 16, Taiwan Stock Exchange data showed.
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