The report of Cathay Construction's latest land acquisition in Xindian City Tuesday and the public auction of a premium land lot in Tianmu of Taipei City today are widely seen as new optimistic signals for the continuously bullish real estate market in the Greater Taipei area.
Construction shares gained the most at 2.53 per cent among all sectors on the Taiwan stock market as the market's key price index rose 60.71 points, or 0.79 per cent, to close at 7,695.63 Tuesday.
Cathay Construction, the realty development arm of the Cathay Financial Group, made public the information that the company has purchased new land parcels valued at NT$2.789 billion (US$88 million), averaging NT$2.2 million (US$69,300) per ping (one ping equals 36 square feet), in Xindian of Taipei County.
A company statement said that the new land lots were acquired mainly because of their proximity to the Xindian City Hall Station of the Mass Rapid Transit (MRT) system in the Greater Taipei area.
Market analysts said that the land space will enable Cathay Construction to build new apartments with aggregate market value of more than NT$6 billion.
The new housing units can be easily sold out to families that plan to move out of capital Taipei to Taipei County, which is poised to be upgraded later this year to a new special municipally under the name of Xinbei (New Taipei) City.
Aside from Xindian, Cathay Construction has already accumulated land lots in other Xinbei areas, including Xinzhuang City that will also be served with a new MRT line.
This points to the trend that realty development companies have are increasing projects in Xinbei that still have vast land for development, said realty analysts.
The public auction of the prime land lot of 1,715 ping on Tianmu East Road in Tianmu district of Taipei City has drawn special market attention after the government announced a new policy earlier this month to suspend sales of state-owned prime land lots in capital Taipei.
The halt on sales of government land in Taipei City was in response to mounting complaints about the runaway apartment prices that are out of the reach of most wage earners.
But the measure is expected to only drive up the prices of privately owned land properties that have become more scarce and precious for developers.
The land lot in Tianmu, currently used by Holy Word Children's Home for of about 50 orphans, was put on sale by the private owner, a Christian organization.
The floor bidding price was set at NT$4.97 billion or NT$2.9 million per ping.
Many life insurance firms, financial institutions, construction companies, and business conglomerates have expressed keen interest in acquiring the property as the opportunities to buy government land in Taipei are now temporarily suspended.
But some analysts said that there could be only about a dozen of bids tendered.
Under the government's present policy of cooling down the real estate market, bank loans that can be raised by potential investors will remain a major concern.
Although the large business groups are eager to snap up the rare land lot, some senior executives at the interested enterprises demonstrated reservations for fear of being blamed as culprits in fueling speculation in the real estate market if the eventual bidding price sets a new record, said the analysts.
