The government is to auction the superfices right to an idle plot in central Taipei with a ban on residential development amid concern that it could be turned into a luxury housing project and reignite a price war.
The plot on the intersection of Renai Road and Fuxing S Road would be the first and only superfices right deal initiated by the National Property Administration to help revitalize idle state-owned assets.
The auction is slated for September after the agency tears down the existing complex — the site of a former hostel for military personnel.
The plot sits right across the Howard Plaza Hotel Taipei (福華飯店) and covers 1,139.5 ping (3,767m2), making it a rare and viable property in the capital, where land is scarce, government data showed.
Life insurance companies, property developers and hotel operators are likely to show keen interest, despite the lack of permanent ownership, officials said.
The winning bid would gain a 70-year lease for commercial property development.
The agency has imposed a special ban on residential development, although zoning codes allow both commercial and residential uses, officials said.
The agency said the ban is aimed at preventing development of luxury homes — properties priced more than NT$70 million (US$2.33 million) per unit as defined by the central bank and the Ministry of Finance.
The regeneration of idle state properties had been blamed for worsening the problem of housing unaffordability in Taipei in previous years, prompting the government to limit revitalization projects to surface right deals for plots larger than 500 ping.
The agency is to organize briefings for the project and extend applications to two months in light of the large amount required and heavy attention the investment is likely to draw, officials said.
Bidding requirements are likey to be disclosed next month after the demolition is completed this month, they said.
Superfices rights costs fall between 30 and 50 percent of market rates for land with permanent ownership, but the agency is considering setting the floor price at 40 to 45 percent given the potential profit it could generate, they said.
The winning bid will have to pay a one-off royalty and annual rent equivalent to 4.5 percent of the government-assessed value — higher than the 3.5 percent for other surface rights deals.
Property analysts said that the agency’s concern over luxury home development is unnecessary, as construction companies have largely stayed away from such projects, following price corrections and difficulty finding buyers.
Luxury homes without permanent ownership would make them even more difficult to sell and developers know the risks very well, analysts said.
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