Ruentex Development Co (潤泰創新), one of Taiwan’s major supermarket operators and property developers, yesterday failed to sell two plots of land in Taipei for the second time.
“The auction did not draw any bids as of the deadline,” said Gordon Kao (高銘頂), general manager of Savills Taiwan Ltd (第一太平戴維斯), which organized the sale.
Three local medium-sized construction firms expressed interest, but preferred private negotiations to seek a more favorable price and avoid media exposure, Kao said.
The two plots, on Yanping S Road and Changsha Street, have a floor price of NT$3.5 million (US$114,980) per ping (3.3m2), significantly lower than the record NT$14.05 million Ting Ho Co (頂禾開發) offered in securing China Bills Finance Corp’s (中華票券) headquarters building on Dunhua S Road a day earlier.
Ruentex’s plots, measuring 140.06 ping and 35.09 ping respectively, were too small to attract large developers, Kao said.
Analysts said yesterday’s failed auction highlighted the soft housing market in Taiwan, although commercial property transactions remain robust as companies are eager to reduce excess liquidity.
Domestic life insurers, while keen to cut idle funds, are limited to real-estate investments that can generate reasonable rental yields or quick returns as required by the Financial Supervisory Commission to prevent land hoarding.
The regulatory constraint has fueled competition for real-estate backed securities by life insurers, most of which are flush with cash, said Tony Chao (趙正義), managing director at Jones Lang LaSalle, an international property consultancy.
Increasing global economic uncertainty and the eurozone debt crisis further reduced investment options, Chao said.
The rosy outlook does not apply to the housing market that could see transactions dwindle as economic conditions worsen, Chinese-language Housing Monthly (住展雜誌) said.
The monthly publication yesterday flashed a “yellow-blue” light for the housing sector in the coming months as a result of sharp declines in presale housing projects and newly completed homes.
Presale housing projects this month dropped 60 percent from last month, while newly completed homes fell 40 percent in the number of construction projects, the monthly said.
The second-hand home market is equally weak, with transactions falling 14 percent year-on-year in Taipei for the first eight months of the year, weighed down by the luxury tax, Sinyi Realty Inc (信義房屋) said, citing government figures.
To boost sales, the nation’s only listed broker has shifted attention to areas other than Greater Taipei, which has been the focus of government efforts to cool the real-estate market.