The nation’s commercial property market may inadvertently benefit from the sluggish stock trading as securities houses are selling office buildings in prime locations in Taipei to prop up their financial health.
The divestment plans came after the daily stock turnover dropped to NT$60 billion this month, while securities houses reliant on brokerage business for income need NT$100 billion to break even.
Yuanta Asset Management Co (元大國際資產), a subsidiary of Yuanta Financial Holding Co (元大金控), plans to auction a 18-floor office building on Jianguo N Rd Sec 2 next month, with the floor price set at NT$3.5 billion (US$116.28 million), said bidding organizer DTZ, an international property consultancy.
Yuanta Securities (元大寶來證券), the flagship unit of Yuanta Financial and its main source of income, aims to sell office space in Ximending (西門町) and Neihu (內湖) districts with a combined asking price of NT$1.58 billion, DTZ said.
Separately, MassMutual Mercuries Life Insurance Co (三商美邦人壽保險) intends to divest a 12-story office building on Xinyi Rd Sec 4 next month, a property half-owned by Horizon Securities (宏遠證券), according to auction arranger Savills Taiwan Ltd (第一太平戴維斯). The 14-year-old building has a floor price of NT$5.88 billion with the auction date set for Aug. 23, Savills said.
The upcoming auctions are set to invigorate a previously listless commercial property market that saw transactions falling to NT$38.8 billion in the first half, less than one-third of a record trading last year with NT$120 billion.
Total transactions may now rise to a new high of NT$160 billion for the whole of this year, thanks to a sharp increase of supplies in popular locations, said Michael Wang (王維宏), an account manager at Sinyi Global Management Co (全球資產), which is a member of Siny Realty Inc (信義房屋).
“Securities houses have no choice but to realize gains on real estate investments to cope with shrinking revenue,” Wang said.
Of the nation’s 84 securities houses, 45 reported losses last month, while 39 posted profits, Wang said, citing Taiwan Stock Exchange data.
Property sales generated NT$1.17 billion, accounting for 70.31 percent of NT$1.66 billion gains for all securities houses, Wang said.
Pacific Securities Co (太平洋證券) and Yung Shin Securities Co (永興證) sold a total of 1,394 ping (4,600 m2) of office space in downtown Taipei for NT$2.41 billion in May, Wang said.
Domestic insurance companies have expressed interest in the office buildings for sale, DTZ and Savills Taiwan said.
Shin Kong Financial Holding Co (新光金控) senior vice president Sunny Hsu (徐舜鋆) said on Saturday that the company’s life insurance subsidiary, Shin Kong Life Insurance Co (新光人壽), was eyeing products adjacent to mass rapid transit stations.
Shin Kong Life believed it was favorable to take advantage of the property sales, Hsu said.
In a similar move, China Life Insurance Co (中國人壽), the nation’s fourth-largest life insurer, said in a stock filing last week that its board had approved plans to acquire properties in the Greater Taipei area.