Shin Kong Life Insurance Co (新光人壽) yesterday won the auction for a commercial building near Taipei Railway Station, less than two weeks after acquiring the ground floor of the Asia Plaza Building (亞洲廣場大樓) nearby, auction organizer Savills Taiwan said.
The life insurer, Shin Kong Financial Holding Co’s (新光金控) flagship subsidiary, offered NT$1.62 billion (US$55.66 million) for the 11-story building on the intersection of Xiangyang Rd (襄陽) and Chongqing South Rd (重慶南路), the property consultancy said.
The final price was 7.79 percent higher than the floor price and the deal translated into NT$2.65 million per ping (3.3m2) for the first floor and NT$790,000 per ping for upper floors, Savills Taiwan general manager Gordon Kao (高銘頂) said.
If measured by land alone, the insurer offered NT$9.81 million per ping for the plot measuring 163.05 ping on which the building sits, Kao added.
The insurance company’s latest real-estate acquisition may generate 2.3 percent rental yield a year, with Citibank occupying the bottom two floors and Look Hotel Taipei (台北樂客) the remaining ones, Kao said.
“The auction result reaffirms the solid demand for commercial properties in popular locations because they promise stable rental income and handsome capital gains,” Kao said.
Taiwan Realty Co (台灣房屋) agreed, adding that Hsinchu-based Well Glory Development Co (志嘉建設) bought the building from Citibank Taiwan for NT$650 million three years ago and subsequently sold it for nearly 2.5 times as much.
The broker attributed the building’s rapid increase in value to its closeness to the Taipei Twin Towers (雙子星大樓) project to be carried out by a consortium composed of Malaysian, Japanese and Taiwanese developers.
However, the rental yield of 2.3 percent is lower than the 2.5 percent threshold Shin Kong Life set for its real-estate investments, which accounted for 7.3 percent of its portfolio and generated an average of 3.89 percent returns for the first nine months, company data showed.
Neither Shin Kong Financial nor Shin Kong Life was available for comment on the bidding, although senior executives said earlier they aimed to continue efforts to raise the companies’ stakes in real estate.