Hontai Life Insurance Co (宏泰人壽) yesterday won the bid for a floor of an office building in downtown Taipei by offering a premium of 7.3 percent, reflecting continuing strong market demand for office buildings.
The life insurer offered NT$188.89 million (US$6.37 million) for the fourth floor of the office tower on Nanjing E Road Sec 3, auction organizer Yung Ching Asset Management Co (永慶資產管理) said in a statement.
The auction for the floor — which measures 209 ping (690m2), plus two ramp-type ground parking spaces and three mechanical parking spaces — drew two bidders, with the auction outcome translating into NT$851,000 per ping, bidding statistics showed.
“Hontai Life’s offer was generally in line with market expectations,” Yung Ching vice president Jeffry Huang (黃增福) said in the statement.
Huang said office buildings located in the area near Nanjing E Road and Fuxing N Road showed the strongest momentum in trading volume and prices among all business areas in Taipei this year, with prices rising more than 20 percent from a year ago.
The low vacancy rate for office buildings, as well as the convenient transportation in the area in the near future — following the Mass Rapid Transit (MRT) Songshan Line opening by the end of next year — were two major drivers of demand in the area, Huang added.
For the second quarter, the vacancy rate for office buildings located in Taipei dropped to 8.1 percent, down 0.5 percentage points from the first quarter, on the back of strong demand from financial institutions, life insurers, retailers and hotel operators, a quarterly report issued by Yung Ching showed.
The signing of a cross-strait investment protection pact also drove up Chinese companies’ interests in Taiwan’s commercial property market over the past few months, the report said.
With slowing economic sentiment and low interest rates, Taiwan’s life insurers have been focusing more on commercial property.
The central bank’s move to tighten credit-control measures on luxury housing loans at its board meeting in June has further pushed buyers to focus on the commercial property market, Huang added.
Life insurers invested in NT$20.6 billion of commercial property in the second quarter, accounting for 60 percent of total investment amount, the report’s data showed.
Last month, Cathay Life Insurance Co (國泰人壽) won bidding for several floors of an office building in central Taipei partially owned by Mercuries Life Insurance Co (三商美邦人壽保險) and Horizon Securities (宏遠證券), by offering NT$72.6 billion, or 23.4 percent more than the floor price.
However, Yuanta Financial Holding Co (元大金控) last month failed to sell an 18-floor office building on Jianguo N Road Sec 2, as well as office space in Ximending (西門町) and Neihu (內湖) districts, through a public auction with a combined floor price of NT$5.08 billion.