Recovering property market lures oodles of foreign money

The nation is expected to attract more foreign funds into its expanding commercial property market this year, as return on investment is rebounding from three years of negative numbers amid rising rents, an international property agent said yesterday.

New office buildings worth more than NT$20 billion (US$641 million) will be put up for sale this year, up from NT$8 billion last year, with around 70 percent of that amount going to foreign buyers, Jones Lang LaSalle forecast.

"Last year, foreign property investors started to tap into the local market. After the warm-up, this year may be a record period for Taiwan's commercial real-estate market," said Calvin Wang (王治平), a managing director of Jones Lang LaSalle's Taipei branch.

"We feel the momentum is building up in January and February. A lot of potential buyers are approaching us seeking good deals," Wang said.

On the landlords' side, local financial groups and the industrial sector -- the primary owners of Taiwan's office buildings -- were being pressured by the government to sell their real estate after the implementation of a new accounting rule, Wang added.

Active trading over the past six months in Taiwan's real-estate market strengthened the belief that the market was recovering from a trough, Wang said.

During that period, Jones Lang Lasalle has helped its clients, including Prudential Life Insurance Co, buy four office buildings worth NT$6.8 billion in the Greater Taipei area, he said.

"Taiwan is getting growing interest from international commercial property investors," Wang said. New cases worth NT$14 billion are in talks now, he added.

Rising yield in the local market is one of key factors attracting overseas property investors' attention, Wang said, adding that reducing investment risk by diversifying to the emerging Taiwanese property market was also part of the reason.

Yield for premier office buildings in Taipei edged up to 5.5 percent last year, compared to South Korea's 8 percent and Japan's 5 percent, according to the property agent's research.

The increase also pushed up the total return close to 9 percent, from negative 6 percent or negative 7 percent in 2002, the worst period for the real estate sector, the research showed.