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Auction of Agora Garden hotel attracts only one buyer

The auction of the five-star Agora Garden (亞太會館) hotel in Taipei attracted only one buyer, BES Engineering Corp (中華工程), whose majority shareholder owns the property for sale, fueling claims that the hotel was overpriced, a realtor said yesterday.

“It is more than likely Agora is overpriced,” Stanley Su (蘇啟榮), senior researcher at Sinyi Realty Co (信義房屋), Taiwan’s only listed property broker, said by telephone.

“That would explain why there was only one bidder. That the buyer is affiliated with the seller lends further support to my theory,” he said.

The engineering company said price negotiations were still under way and would require final approval from its board of directors and shareholders.

The Core Pacific Group (威京集團), which owns both the hotel and BES Engineering, told local media a day earlier that BES had made an offer higher than the floor price of NT$15 billion (US$463.4 million).

The hotel sits on a 2,468 ping (0.82 hectare) plot of land in Xinyi District (信義) and has 14 floors above ground and four underground. It is being marketed as an ideal site for developing upscale housing units.

Billy Yen (顏炳立), general manager of international real estate consultancy DTZ (戴德梁行), which was commissioned to organize the bidding, said whatever the closing price, the property would prove a bargain years from now in light of the scarcity of land and an expected influx of Chinese capital.

“The local commercial property market is bound to boom on warming cross-strait trade ties,” he said.

Yen said a Hong Kong investor had expressed interest but backed off after the government questioned the legality of the purchase of Nan Shan Life Insurance Co (南山人壽) by a consortium led by Primus Financial Holdings Ltd and Hong Kong-based China Strategic Holdings Ltd (中策集團) earlier this month.

“The implication that Chinese capital pulled the strings behind the [Nan Shan] acquisition scared away the Hong Kong investor,” Yen said.

Su, however, disagreed, saying profitability was investors’ main concern.

The apparent lack of interest in Agora Garden indicates that the nation’s luxury housing market would find it difficult to achieve prices of more than NT$3 million per ping if a luxury housing project is to be rebuilt on the hotel’s site.

Su said that while improving cross-strait trade ties were favorable for the local property market, it was too early to tell what the exact impact would be.

Investors are likely to take a wait-and-see approach, given the huge amount required for the deal, he said.

Meanwhile, Bank SinoPac (永豐銀行) yesterday auctioned off a 721.83 ping plot of land near Chinese Culture University in Taipei to Tonlin Department Store Co (統領百貨) for a record high in the area of NT$628.88 ­million, or NT$871,200 per ping.

The new buyer outbid three other bidders and closed the land sale at a 50 percent premium on the bank’s asking price of NT$420 million.

Chiu Tai-hsuan (邱太煊), a real estate analyst at Taiwan Realty Co (台灣房屋), estimated that a new housing project to be built at the site was likely to sell for between NT$850,000 and NT$1 million per ping, according to a statement released yesterday.

ADDITIONAL REPORTING BY JOYCE HUANG
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