Tue, Jul 08, 2003 - Page 10 News List

Chinese investment won't help real-estate market

By Annabel Lue  /  STAFF REPORTER

Real-estate market watchers were cool yesterday to the government's proposal to allow Chinese companies to set up branches in this country, saying it will have limited effect on the office-leasing market.

The proposal, drafted by the Ministry of Economic Affairs, aims to boost the real-estate market, according to Tony Huang (黃慶堂), executive secretary at the ministry's Investment Commission.

Once the ministry completes the proposal it will be forwarded to the Cabinet for review.

"We don't expect to see strong demand from mainland companies [for renting office space]," said Hsu I-hsiang (許依祥), a director at CB Richard Ellis Taiwan Ltd (世邦魏理仕).

She said many Chinese companies who have business ties with Taiwanese firms have already assigned employees to their partners' offices and don't need outside office space.

For instance, even though the government is offering incentives as well as space to tech companies setting up offices in Neihu Industrial Park, Chinese firms may decide to rent space inside their partners' offices to save money, Hsu said.

Even if Chinese companies want to set up their own offices, the space they need initially would be less than 100 pings (330m2), Hsu said.

"Compared to the current over-supply in office space [in Taipei], the weak demand will be very little help," she said.

Another real-estate agent said oversupply is turning into a major problem.

"Over the last 15 months, the Taipei office vacancy rate has kept rising, while rents keep falling," said Vicky Hsu (許美珠), an assistant manager at Colliers Jardine Ltd (怡高物業顧問), the local branch of Colliers Jardine International.

The average Taipei office rent rate fell 2.3 percent to NT$1,814 per ping in the second quarter of this year from the previous quarter, according to Colliers' statistics.

Premium office rentals have seen the biggest decrease, dropping 3.47 percent to NT$1,995 in the second quarter of this year from the previous quarter's NT$2,282.

"We expect rentals to continue to fall for the rest of the year or even through the end of next year," Hsu said.

Last year, a total of 38,600 pings (127,380m2) of office space was released in Taipei and that number is expected to surge 55 percent to 60,000 pings (198,000m2) this year.

Next year there will be even more new office space as many buildings now under construction will be finished by year end, such as the Taipei Financial Center Corp (台北金融大樓公司), Hsu said.

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