Shin Kong Life Insurance Co (新光人壽) yesterday won the bid for the 50-year superficies rights to a plot of land in Taipei for NT$416.88 million (US$14 million), setting yet another example of insurers’ keen interest in commercial real estate after the financial regulator last month removed a ban on property investment.
The winning bid was 1.51 times higher than the NT$275.86 million floor price set by the landowner, CPC Corp, Taiwan (台灣中油).
Under the terms of the deal, the insurer can use the land for 50 years, with a maximum extension of another 20 years. The two companies are scheduled to sign the agreement in early November, the state-run oil utility said in a statement.
Following yesterday’s auction, CPC plans to sell the superficies rights to three other plots in Taipei, New Taipei City (新北市) and Hsinchu City by the end of the year as part of its plans to increase utilization of its idle or underused real-estate assets.
Shin Kong Life was one of the four bidders — which included Farglory Life Insurance Co (遠雄人壽) and Gsharp Corp (宜津企業), operator of Parkview Hotel (美侖大飯店) in Hualien — for the 378 ping (1,251m2) plot.
Located on Chengde Road in Datong District (大同), the land is close to several historical sites, such as the Taipei Confucius Temple, Baoan Temple and Xiahai City God Temple.
It was the second time Shin Kong Life has won the superficies rights to a plot of state-owned land.
In May, the life insurer was granted the 50-year superficies rights to a plot in New Taipei City owned by Taiwan Tobacco and Liquor Corp (台灣菸酒) for NT$1.49 billion.
On Thursday last week, Transglobe Life Insurance Inc (全球人壽) secured the 50-year superficies rights to two plots of land in the hot springs town of Jiaosi (礁溪) in Yilan County for NT$1.3 billion, while Nan Shan Life Insurance Co (南山人壽) on Sept. 6 bought a commercial building from China Metal Products Group (勤美集團) in Greater Taichung for NT$4.9 billion.
Analysts say the commercial real-estate market is heating up following the Financial Supervisory Commission’s lifting of a ban on property investment by domestic life insurers last month, along with government efforts to divert insurance funds into public construction projects.
Michael Wang (王維宏), an account manager at Global Asset Management Co (全球資產), an asset management unit of Sinyi Realty Inc (信義房屋), yesterday said he expects to see more similar commercial property deals by the end of the year.
“The fourth quarter is the high season for the commercial real-estate market,” local cable TV network UBN quoted Wang as saying yesterday.
So far this year, the sale of superficies rights to 23,000 ping of state-owned land has generated NT$12.8 billion in revenue for the government, according to Global Asset Management’s tallies.
CLSA property researchers Frank Lin and Scott Wang said in a note on Tuesday that the recent deals verify the sector’s strong interest in the commercial market and bodes well for Taiwan Fertilizer Corp’s (台肥) 70-year superficies rights auction for a plot of land in Taipei’s Nangang District (南港) next month.
“Though the market is still concerned about rising interest rates affecting transaction prices, recent deals show the gross yield remains at 2.875 percent — the minimum required return set by the FSC,” Lin and Wang wrote.
“This suggests life insurers still enjoy ample liquidity and are interested in buying commercial property,” they said.