Thu, Dec 09, 2010 - Page 12 News List

The Palace housing unit buyer backs out of agreement

BACK ON THE MARKET:An analyst speculated the winning bidder dropped the deal because of risks posed by the previous owner’s legal troubles

By Crystal Hsu  /  Staff Reporter

An apartment unit in Taiwan’s most expensive community, The Palace (帝寶), will be put back on the market next month after the auction winner failed to close the deal before the deadline on Tuesday, fueling overpricing concerns.

The unit, measuring 164.86 ping (544m2) on the fifth floor of the landmark complex near the intersection of Renai Road and Jianguo S Road in Taipei, was auctioned on Tuesday last week for NT$282 million (US$9.14 million), almost 20 percent higher than the asking price of NT$236 million.

TURNAROUND

The turnaround prompted speculation that quick returns on luxury housing investments were exaggerated after the auction, real estate analysts said.

The auction outcome had set a new record for luxury housing in Taiwan with a price of NT$2.06 million per ping. No records were available for rumored transactions of higher value.

“The development subjected the value of luxury housing to another test and the market won’t know the answer until the dust settles,” Stanley Su (蘇啟榮), head researcher at Sinyi Realty Co (信義房屋), said by telephone.

Taiwan Financial Asset Service Corp (台灣金融資產服務公司), the organizer of the previous auction, is expected to arrange a new bidding process next month.

The previous winning bidder, Yu Chang-che (俞昌哲), the son of renowned property investor Liu Yue-chai (劉月釵), pulled out at the last minute, probably because he frowned on the risks posed by legal disputes associated with the former owner, Su said.

OCCUPANTS

“The investor will have to spend more if existing occupants refuse to vacate the unit, driving up costs,” Su said.

Local media reported that some unidentified people have occupied the apartment since former owner Lin Fu-hui (林富慧) was put in jail last year as she could not pay back a debt of NT$120 million to another company nor NT$1 million in back taxes, and was allegedly involved in zoning irregularities in Miaoli County. Some newspaper reports said Lin owed more than NT$200 million in debt and taxes.

While Su said housing ownership in the complex remains attractive given the rosy outlook for the property sector, another real estate broker, who asked not to be named, said concerns over the government’s fresh tightening measures scared away the investor.

Minister of Finance Lee Sush-der (李述德) said on Friday last week the ministry was studying plans to tax capital gains from short-term housing transactions. He said frequent transfers of housing units contributed to unaffordable residential property prices and the ministry would take up the issue if doing so didn’t hurt the economy.

The minister declined to elaborate on the tax rate or other details.

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