Taiwan's commercial real estate is overpriced by up to 20 percent, according to an official of New America International (NAI), a US corporate real-estate company.
"If the nation's commercial real-estate price cannot be lowered by at least 20 percent, the sector will still stay in the doldrums," said Edward Chien (
The local pricing strategy has scared off potential buyers, resulting in a wait-and-see attitude by global and local companies, Chien said.
Chien made the comments after being asked about Shin Kong Life Insurance Co's (
Early last month Shin Kong also failed to find a buyer for a key office building priced at NT$6 billion, located at the intersection between Tunhwa S Road and Jenai Road. The corner property with a 24-hour Eslite Bookstore on its ground floor also had no bidders.
Jasper Villa, an up-scale residence designed with expatriates in mind, is located on Chungchen Road in Tienmu, with a 90 percent occupancy rate and a yearly rental income of NT$310 million.
"Actually, the unit selling price of Jasper Villa is about NT$340,000 per ping, relatively lower than that between NT$370,000 and NT$390,000 per ping of other buildings in the area," Lee said. "But the whole property seems too expensive for investors currently."
While Lee said Shin Kong will re-evaluate the two projects at a board meeting slated for later this month, NAI Taiwan's Chien said that commercial properties can only be profitable businesses when real estate expenses come down to a reasonable level.
Despite his concerns of overpricing in the market, particularly during tough economic times, Chien said the domestic commercial property market still shows strong future potential.
"Based on our research, construction on commercial properties is still expanding in the major metropolitan areas. In Taipei city alone, we have seen an increase of about 60,000 pings of floor space in new buildings during the past year," Chien said.
The new market entrant said they have confidence in the local market, especially after the nation's accession to the WTO earlier this year -- and the recent lifting of the investment ban on Chinese nationals by authorities.
"We're looking forward to the opening-up of further investment and trade between Taiwan and mainland China," said Stephen Atherton, managing director of NAI Asia Pacific, adding that the company entered China last year, with the establishment of Hong Kong, Shanghai and Beijing offices.
Atherton dismissed concerns that the property market in China is on the brink of bursting. "I think it might be little bubbles. I don't think there is a big bubble ready to explode.
"The China market has a lot of new windows opening and many multinationals feel they cannot afford not to be there," he said.
RSS