One of the best-located department stores in Taiwan failed to find a bidder when its auction reached its deadline yesterday, highlighting the lack of appetite in the domestic real estate market.
Shin Kong Mitsukoshi’s Xinyi Place Hall A8 -- described by Billy Yen, managing director of the Taiwan real estate service firm DTZ as a “creme de la creme” piece of real estate -- failed to attract a bid from a buyer for the asking price of NT$28 billion (US$864.5 million).
The news came days after the auction for the Shin Kong Life Manhattan World Trade Building, another prime property in Taipei’s posh Xinyi District, fell through.
With a “pretty decent” estimated return on investment rate of 2.45 per cent, the department store was offered up like “a super model bride with a dowry,” Yen said last week after the Manhattan World Trade Building failed to attract a bidder.
“If a property like (the Xinyi department store) finds no takers, then (the problem for Taiwan’s real estate market) is very serious,” he suggested.
Jones Lang LaSalle Taiwan managing director Tony Chao, who was commissioned by the Shin Kong Group to organise the auction, said he “was not surprised” about the result.
He pointed out that there were 10 groups of potential bidders, mostly local life insurance firms and foreign investors. Local insurers, however, were barred by the Financial Supervisory Commission’s regulation that forbids insurance firms to invest in properties with ROI rates lower than 2.805 per cent. Foreign investors, meanwhile, were still keeping an eye on the trends in Taiwan’s real estate market, he added.
Andy Huang, a researcher and spokesman at Evertrust Rehouse Co., pointed out to the Central News Agency that the sales for Xinyi Place Hall A8 might also have been impeded by the upcoming bid for the former headquarters of the CTBC Bank in Xinyi District, the last of the three “super bids.” CTBC has lowered the asking price by NT$5 billion to NT$15.2 billion, roughly half of Xinyi Place Hall A8’s asking price. Huang pointed out.
The new buyer also enjoys sole proprietorship of and the right to reconstruct the building, making the building potentially a more attractive offer to the few firms and foreign investors with enough financial power to make such a purchase, he said.
(NT$32.39 = US$1)