Ruentex Development Co (潤泰創新), Taiwan’s major supermarket operator and property developer, yesterday defeated five other contestants to win the auction of a plot of land next to the Breeze Center (微風廣場) in Taipei with a 41.65 percent premium, affirming the seemingly insatiable demand for land in popular locations.
Ruentex Development, a member of the Ruentex Group (潤泰集團) and a major shareholder of Nan Shan Life Insurance Co (南山人壽), acquired the 1,345 ping (4,446m2) residential plot on Civic Boulevard for NT$8.2 billion (US$279.43 million), which was higher than the floor price of NT$5.79 billion, bidding organizer DTZ said.
The winning bid results in a price of NT$6.1 million per ping, beating market expectations of NT$5 million, as the scarcity of land in Taipei drives developers to up the stakes, especially those with deep pockets, DTZ general manager Billy Yen (顏炳立) said.
“I had expected intense competition for the plot, but am still amazed at the size of the premium,” Yen said by telephone.
Prior to the auction, DTZ and its property consultancy peers had put the winning bid at about NT$7 billion.
Ruentex’s offer of NT$8.2 billion yesterday makes the undeveloped plot of land — owned by beverage vendor Hey-Song Corp (黑松) and currently used as parking lots — the fourth-most expensive in the country.
A plot on Renai Road sold in July last year remains the most expensive at NT$8.26 million per ping, according to property brokers’ tallies.
Domestic life insurers laid low this time as they are subject to tighter regulatory restrictions over purchases of undeveloped land, analysts said.
Ruentex Development is likely to turn the purchased plot into a luxury housing complex with prices of at least NT$2 million per ping, Yen said, adding that new homes in the neighborhood currently cost NT$1.8 million to NT$1.9 million per ping.
Jeffery Huang (黃增福), an associate manager of Evertrust Rehouse Co (永慶房屋), said the price may reach NT$2.3 million per ping, if Ruentex Development wants to make decent profits.
“That would hit a new high in the vicinity and render a price correction unlikely given increasing land acquisition costs,” Huang said by telephone.
Huang said he expects land transactions to remain active for the rest of the year with the volume already surpassing that of last year in the first three quarters.
The sale generated NT$7.73 billion in profits for Hey-Song, larger than its capital at NT$5.36 billion, the company said in a stock filing, as the beverage supplier is seeking to develop a residential complex in suburban areas of New Taipei City (新北市).
Shares in Hey-Song closed down 2.46 percent at NT$48 yesterday, weaker than the TAIEX’s 0.41 percent gain, after surging 24.51 percent this month and 90.48 percent this year, Taiwan Stock Exchange data showed.
Ruentex Development shares advanced 3.16 percent to NT$55 yesterday, after jumping 11 percent this month and 71 percent this year, according to stock exchange statistics.