Wed, Nov 16, 2011 - Page 12 News List

Q4 commercial property sales could hit NT$45bn

CASHING IN:Real-estate-backed securities are reaping benefits from the limited supply of commercial properties, with total trading value set to hit NT$120 billion

By Crystal Hsu  /  Staff Reporter

Taiwan’s commercial property transactions are likely to hit NT$45 billion (US$1.49 billion) this quarter, boosting the overall trading amount to a new high this year, thanks to strong demand from domestic life insurance companies, real-estate analysts said yesterday.

Investment needs are expected to bolster commercial property prices next year and beyond, as life insurers tend to hold on to their real-estate stakes for quite a while, diminishing the already-limited supply, said Gordon Kao (高銘頂), general manager of Savills Taiwan Ltd (第一太平戴維斯), an international real-estate service provider.

“The market will see more auctions of commercial properties in prime locations for the rest of this quarter, lifting the quarterly transactions to NT$45 billion,” Kao told a media briefing in Taipei.

Total trading value will rise to a record NT$120 billion for the whole of this year, with transactions totaling NT$100.6 billion as of yesterday, Kao said.

Kao attributed the robust trading to plans by real-estate-backed securities issuers to realize gains.

One real-estate investment trust (REIT) issued in 2006 by Taishin International Bank (台新銀行), a subsidiary of Taishin Financial Holdings Co (台新金控), is scheduled to be auctioned next week.

Taishin Bank’s REIT fund owns two basement floors in a building near Pacific Sogo Department Store’s (太平洋崇光百貨) Zhongxiao location in Taipei, an office building on Nanjing E Road, also in Taipei, and part of a commercial building in Taoyuan County, Savills Taiwan data showed.

The property to be auctioned has a floor price of NT$6.25 billion and is divided into two bids.

Another REIT, issued in 2007 by Mega International Commercial Bank (兆豐國際商銀), the banking arm of Mega Financial Holdings Co (兆豐金控), aims to divest the fund of its ownership of the 21st floor of an office building on Dunhua S Road in Taipei next month, Kao said.

The fund, which has set the asking price at NT$178 million, or NT$770,000 per ping (3.3m2), owns a 60 percent stake in the building that may generate a rental yield of 2.6 percent a month, said Pin Chiu (邱奕平), a senior manager at Savills Taiwan.

While the return is relatively low, it is better than what time deposits can offer, let alone potential value gains, Chiu said.

The planned property sales are keeping real-estate investors busy after economic uncertainty slowed business activity in most other sectors in the second half of this year, Kao said.

Taiwanese life insurers, who have accounted for 40 percent of commercial property deals so far this year, have indicated keen interest in the properties to be auctioned, Kao said.

Tatung Co (大同), a home appliances household brand, plans to auction its landmark property in Beitou District (北投), Taipei, which houses Asustek Computer Inc (華碩) and Pegatron Corp (和碩). Jones Lang LaSalle, organizer of Tatung’s auction, links the sale to Tatung’s plan to realize gains.

The cash-strapped Prince Motors Group (太子汽車) has also decided to put its office building on Dunhua S Road in Taipei back on the market next month after the previous bidding fell through because of overpricing.

DTZ, another international real-estate consultancy hired to organize Prince Motors’ auction, will unveil the building’s new floor price on Friday next week, after the asking price of NT$10.3 billion failed to draw any buyers in July.

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