Alfred Lee, The China Post
Citibank plans to hold an auction on Sept. 22 in Taipei to liquidate 40 to 50 houses acquired through overdue bank loans, according to local press reports. Citibank is expected to garner more than NT$50 million at the auction, the same sources said. Late last month, Citibank commissioned DTZ (Debenham Tie Leung) Ltd. to conduct an auction in Tainan which enabled Citibank to bag NT$27 million by auctioning off 20 houses.
The auction, which helped Citibank claw back 63 percent of the NT$43 million that it had planned to recover from the public auction, created a new overdue bank loan recovery mode and served as an example for other banks eager to liquidate inventories of property acquired through overdue bank loans. Before each auction the bank will provide information about the houses on its Web site, including details such as the sizes, locations, house styles, garage, and base prices etc. Information for the September auction will be posted on the bank’s Web site in early September. Interested bidders can contact the company in order to examine the houses before the auction. Before a house is put to an auction, the bank will make a legal clearance to assure no legal disputes will occur in the future, offer basic repairs, and allow potential customers to examine the house. The houses to be auctioned on Sept. 22 are located in Taipei City, Taipei County, Taoyuan, Chungli, and Keelung.
The September sale will be the third time Citibank has cleared up its real estate inventory by holding an auction. It tendered its first auction June 17 in Kaohsiung only to sell nine houses out of 31 houses with a hit rate of about 30 percent. The effects of the second auction late last month were better than previously expected.
In order to improve the hit rate Citibank commissioned DTZ, a leading real estate investment consulting company, to handle the auction. DTZ invited licensed professionals from Singapore to preside over the auction in which bidders made a bid orally. This bidding practice attracted hundreds of bidders, including local bankers and real estate brokers to take part in the auction. Citibank will hold the fourth auction in Kaohsiung on Oct. 6. In Tainan, Citibank has more than 70 houses acquired due to defaults of overdue bank loans.
In Taiwan as a whole it has an inventory of 300 houses. In order to step up processing of these houses Citibank has set up offices in central and southern Taiwan to handle the auctions-related business. Local banks, including Taishin International Bank, Chang Hwa Bank, Ta Chong Bank Ltd., and foreign-invested insurance companies are also preparing to unload their inventories of real estate properties acquired due to overdue bank loans.
In Citibank’s previous auction base prices of auctioned houses were about 60 percent of their going market prices, which are based on appraisals conducted by real estate professionals. DTZ officials said that base prices of houses to be auctioned in the future might decline to 30 or 40 percent of the going market prices.
Citibank is expected to recover 50 percent of the overdue defaulted loans in Taiwan by holding auctions to liquidate the inventories of its real estate properties. In Central Taiwan the total number of houses which are being auctioned off by local courts reached 7,200 units in the first half of this year. Of the 7,200 houses, only a limited number of transactions were completed, with a total transaction value standing at NT$8.3 billion. Last year 8,600 houses in the Taichung area were auctioned by the Taichung local court. Of the total, 4,100 houses were auctioned off with a combined transaction value of NT$18 billion.