The nation’s land market remains strong and could see record trading this quarter if an auction for superfices rights to regenerate the Taipei World Trade Center’s Exhibition Hall 3 secures a buyer next week, analysts said.
The Ministry of Finance is to go ahead with the auction on Monday for a 70-year superfices rights lease to redevelop the 17-year-old hall next to Taipei 101 in the city’s Xinyi District (信義).
The ministry has set a floor price of NT$26.64 billion (US$878.74 million) for the 4,856 ping (16,053m2) plot, which can be developed into a mixed-use complex featuring upscale office space.
The auction could raise land transactions above NT$70 billion this quarter after major deals have so far totaled NT$47.8 billion, international property consultancy Savills Taiwan Ltd (第一太平戴維斯) research manager Erin Ting (丁玟甄) said.
Domestic life insurers would be among prospective buyers given their deeper pockets, Ting said.
Regular rental income that would be created by the project would also attract bidders, she said, adding that monthly rent for new grade-A office space would be NT$4,000 per ping.
“The amount would be acceptable in light of low vacancy rates and a lack of new supply on the horizon,” Ting said.
The auction is drawing attention, as it comes at a time when the COVID-19 outbreak in Taiwan and abroad is dampening confidence in all business sectors.
Knight Frank Taiwan researcher Andy Huang (黃舒衛) said that domestic insurers are unlikely to sit out auctions for investment targets in Taipei’s central business districts.
Superfices rights auctions for properties in popular locations have over the past few years witnessed intense competition, as they proved profitable investments thanks to robust demand for Grade-A offices, Huang said.
However, similar investment opportunities in Kaohsiung failed to attract any bidders last month, driving Taichung authorities to put off auctions for plots of land intended for a financial complex in central Taiwan.
Huang said that the size of the vast plots in Taichung and Kaohsiung raised uncertainty about their profitability outlook, which he said is not the case in Xinyi District.
The exhibition hall is close to MRT stations, department stores, restaurants, and the headquarters of Taiwan’s top financial and technology companies.
Nevertheless, the high asking price would limit the number of participants and the outbreak could dim the chance of generous premiums, Huang said.
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