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Auctions of 2 major properties end in failure

The auctions of two properties yesterday ended in failure as enthusiasm in commercial realty wanes further, analysts said.

The first auction was held by Taiwan Sugar Co., which sought to sell the rights to develop its 4,000-ping lot in Wenshan District of Taipei. One ping is 3.3 square meters.

The sale took place in Taiwan Sugar's Taipei offices, only to see no one showing up. “We'll review what went wrong and decide on another date,” the company said.

The parcel is located on Section 4 of Muzha Road and is 10 minutes' walk from the MRT Muzha Station. The lot has total area of 3,929 ping and its developmental rights were going for NT$690 million, or about NT$175,000 a ping — some 20 percent lower than market value.

Yet the sale still failed to draw bidders due largely to its location, according to market observers. “A mall built on it may not attract a lot of people as it's not located in a prime, downtown area,” experts said.

Meanwhile, the auction of the semi-complete Kolin Mall in Xinzhuang, New Taipei, again failed to draw bidders yesterday, the second time it has been offered for sale. The base price has been slashed from NT$4.8 billion to NT$3.84 billion.

The failures come after a string of recent commercial property purchases by insurance firms, which are required to offer prices that ensure an investment yield of above 2.125 percent.

The requirement was announced by the Financial Supervisory Commission (FSC) in August with the goal of keeping prices from surging out of control. The move however has recently spurred insurers to purchase more properties.

The FSC again reminded insurers of the 2.125-percent threshold and said it does not rule out conducting special investigations into purchases.

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