The Taipei County Government auctioned 15 lots in Sinjhuang (新莊) yesterday for NT$13.2 billion (US$417.46 million), more than double the floor price, as the demand for commercial property spreads out from Taipei City, the county government said in a statement.
The auction drew 95 bidders from major local construction companies expecting real estate prices to surge with the extension of the mass rapid transit system into the area.
The 15 lots on a 2.3 hectare property were offered at a floor price of NT$6.19 billion, or NT$850,000 to NT$900,000 per ping (NT$272,250 per square meter), government data showed.
Hung Poo Real Estate Development Co (宏普建設), Huang Hsiang Construction Co (皇翔建設), Ruentex Development Co (潤泰創新), Lih Pao Construction Co (麗寶建設) and Farglory Land Development Co (遠雄建設) were among the bidders.
Taiwan’s major life insurance companies reportedly also tendered bids, but tempered their offers amid concerns over low returns.
One plot, measuring nearly 600 ping, cost NT$232 million per ping, the highest in Taipei County, which will be upgraded to a special municipality like Taipei City and Kaohsiung City before the end of the year.
Jeffrey Huang (黃增幅), a researcher at Yungching Rehouse Co (永慶房屋), said the auction prices and the number of participants were higher than expected, reaffirming solid demand for commercial property.
Investors had no choice but to channel their funds to Taipei County given a scarce supply of land in Taipei City, he said.
Yesterday’s winners will likely develop the land into office buildings with some mixed with residential apartments, Huang said.
Huang said he expected the central bank to hike key interest rates by another 12.5 basis points at its quarterly board meeting next week, but added that the adjustment would not have much of an impact in cooling down the commercial property market.
The central bank cut key interest rates seven times between September 2008 and February last year to a record low to weather the global financial crisis. It raised the rate 12.5 basis points in June to 1.375 percent.
The record-low interest rates, coupled with President Ma Ying-jeou’s (馬英九) push for closer economic relations with China, have boosted Taipei housing prices to the highest levels since 1991.
Grand Cathay Securities Corp (大華證券), however, predicted that Taipei home prices could drop as much as 5 percent in the short term if the pro-independence opposition wins most of the five mayoral seats up for contest on Nov. 27.
“There’s speculation in the market that there’s bound to be a correction in prices if the DPP is in power, so sentiment is affected,” said Eric Zhang (張聖鴻), an analyst at Grand Cathay.
Housing prices in Taipei averaged NT$219,000 per ping in 2000 when the DPP’s Chen Shui-bian (陳水扁) won the presidency and fell for the next two years, according to real-estate brokerage Sinyi Realty Co (信義房屋).
Prices in Taipei averaged NT$489,000 per ping in the second quarter this year.
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