Singfor Life Insurance Co (幸福人壽) yesterday won an auction for a plot of land in Xinyi District with a bid of NT$2.818 billion (US$83.3 million) — 54 percent higher than the floor price — with analysts saying upscale housing units remained commercially viable amid the recession.
Singfor, which was fined in December by the Financial Supervisory Commission (FSC) for acquiring an adjacent plot with excess capital, said in a statement that it had joined the bid on behalf of Jinxiang Construction Co (金享建設) in China and had transferred the first plot to the firm the previous day.
The transfer earned Singfor a profit of NT$200 million, the statement said.
After consulting Jinxiang, the insurance company agreed to pay NT$985 million more than the floor price of NT$1.83 billion for the D3 plot, the statement said.
“Singfor is a nominal buyer only,” the statement said. “The arrangement enabled the company to comply with the FSC ban on property deals and to honor its pledge to join the auction.”
Singfor promised Citibank Taiwan (花旗銀行) in July that it would seek to win the bid for the 911 ping (3,012m²) plot of land after securing the unit next to it. Both pieces are located across from the Taipei 101 building and cost Singfor an average of NT$900,000 per ping.
Singfor said the real buyer, Chen Chung-ming (陳忠明), was a low-key Taiwanese businessman who has run successful land development businesses in different parts of China for the past two decades. Chen, a vice chairman of the Taiwan Businessmen Association in Fuzhou, Fujian Province, was attracted to the profit potential of the area following improvements in cross-strait ties, the statement said.
“Chen shares the emerging confidence that the economy will start to revive in the second half,” the statement said.
Property analysts said that in light of its size, the buyer was likely to turn D3 into luxurious housing units.
“Though expensive, the land is the last chance to secure a foothold in the upscale Xinyi District,” Victor Chang (張欣民), a marketing consultant at Era Real Estate Taiwan (易而安不動產), said by telephone. “An upscale residential complex promises the best investment option as office buildings are less profitable and there are already several department stores in the district.”
Jeffrey Huang (黃增福), a researcher at Evertrust Rehouse Group (永慶房仲集團), agreed and said the builder would have to charge NT$1.3 million per ping after putting the complex on the market.
“Although the market is sluggish at present, it will definitely have recovered in three years’ time,” Huang said. “The district has a distinct and unique appeal that cannot be found in other areas. That explains why real estate there has remained so expensive despite the recession.”