Agora Garden (亞太會館), a five-star hotel in Taipei whose high selling price scared away potential buyers last year, is to go on the market again this week, but analysts yesterday warned of a repeat failure unless the price is more reasonable this time.
DTZ (戴德梁行), an international real estate consultancy, will hold a media briefing on the property today with the Core Pacific Group (威京集團), owner of the hotel, expecting to draw in NT$25 billion (US$764 million), a record price for any property transaction.
DTZ said in a statement the property market has improved substantially a year after the global financial downturn, as seen in massive capital repatriation and warming trade ties with China.
NEW HIGH
The transaction, if carried out, would push the price for the luxurious home project to a new high, DTZ said, pegging Agora Garden at the prime housing site in the upscale Xinyi District.
The hotel, sitting on a 2,468 ping (0.82 hectare) plot of land, was priced NT$19.9 billion last year while market analysts put the value at less than NT$10 billion.
Stanley Su (蘇啟榮), senior researcher at Sinyi Realty Co (信義房屋), Taiwan’s only listed property broker, said the financial crisis and improving cross-strait ties made properties in prime locations more attractive, though the pace of increase remained to be seen.
Domestic insurers have raised their real estate investments as the financial crisis has lowered their risk appetite, Su said.
He added that the expected inflow of Chinese capital and executives further rendered luxurious housing units ideal investment options.
But Su said the price set for Agora was unreasonable.
“I don’t think the local market is ready for price hikes of that scale, although I agree there is room for upward adjustment for upscale home projects in light of land scarcity,” the researcher said by telephone.
Su said land developers would have to charge NT$4 million per ping if they acquired Agora for NT$20 billion or higher.
NO PROFITS
“It makes more sense to sell apartments in Xinyi District at NT$1.5 million per ping,” Su said. “No investors would enter deals that promise no profits no matter how encouraging the outlook may be.”
If the owner is willing to lower prices, Su said, local insurers may take part in the auction as most of them also own construction firms.
Victor Chang (張欣民), general manager at Pacific Assets Management Co (太平洋資產管理), said the expected 25 percent price hike is unrealistic after Agora failed to sell through at NT$8 million per ping last year.
“The object will draw intense attention but not necessarily many buyers if it insists on a high price,” Chang said by telephone.
Only investors with deep pockets can afford investment worth NT$10 billion in the first place, Chang said.
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