Lung Yen Life Service Co (龍巖集團) yesterday won the auction for Chinfon Commercial Bank’s (慶豐銀行) stake in the Taipei Financial Center building (台北金融中心) for NT$1.82 billion (US$56.9 million), the auction organizer said.
The final price represented a 46.5 percent premium over the floor price and translated into NT$955,000 per ping (3.3m²) for the office space, the second-highest price in history, real estate service provider Taiwan Savills Co (第一太平戴維斯) said.
The auction drew four bidders and the winning bid by Lung Yen, a funeral service provider, showed that the need to digest excess funds extends beyond financial firms and may push the prices of commercial properties higher, analysts said.
Chinfon’s stake in the commercial building measures 1,905 ping (6,300m²) of office space on different floors of the building, which is located on the intersection of Nanjing E Road and Dunhua N Road near Taipei Songshan Airport. Debt-ridden Chinfon was taken over by the Central Deposit Insurance Co (中央存保) in September 2008 on the orders of the Financial Supervisory Commission.
“The auction will give Lung Yen a share in the building next only to that of Cathay Life Insurance Co (國泰人壽), which owns about a 17 percent stake,” Taiwan Savills general manager Gordon Kao (高銘頂) said in a statement.
Kao said Lung Yen may charge monthly rent of up to NT$7,000 per ping when leasing the ground floor given its proximity to Taipei Arena.
Altogether, the investment may yield an average of 3 percent to 3.5 percent in rental income.
Jeffrey Huang (黃增福), an assistant manager at Yungching Rehouse Group (永慶房仲集團), said commercial property prices in Taipei have yet to peak now that funeral service firms like Lung Yen have also vied for real estate investments.
“The limited supply will sharpen the competition and push prices higher,” Huang said in a release.
Sinyi Realty Co (信義房屋) said there was still room for price hikes for commercial properties.
“That explains why even partial ownership of a building is also attractive among investors,” the brokerage said yesterday in a separate release.
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