The vacancy rate for grade-A office space in Taipei climbed to 13.8 percent this quarter and is expected to reach 20 percent in the second half as foreign firms prepare to move to suburban areas to trim rent costs, Jones Lang LaSalle Taiwan (仲量聯行) said yesterday.
But Evertrust Rehouse Co (永慶房屋), a major local real-estate broker, said office property prices in the capital gained 6 percent in the same period on expectations of an inflow of Chinese capital.
Sherry Wu (吳瑤華), director of the global real estate agency’s Taiwan branch, said the financial crisis dealt a serious blow to commercial property markets around the world and that Taiwan was no exception, judging by the company’s quarterly report.
“More firms moved out of upscale office buildings to cope with the economic downturn,” Wu said. “The trend is expected to persist for the rest of the year with rental rates shrinking further.”
Companies vacated about 3,600 ping (11,900m²) of office space from April until this month, pushing the total area left vacant in the first half of the year to 17,800 ping, Wu said.
Wu said the figure was likely to grow to 32,000 ping this year, compared with 21,900 ping left vacant during the height of the previous recession in 2001.
Monthly rental rates in the central business district (CBD) dropped an average of 1.09 percent to NT$2,485 (US$75.53) per ping this quarter, while sub-prime areas shed 3.2 percent, the report said.
Office rental rates in the Dunbei (敦北) district remained relatively unaffected, the report said.
Overall rental costs for grade-A office space have declined 4.09 percent since last September, with rates in non-CBD areas showing the biggest fall of 7.06 percent. Prices in the Dunbei area were most resistant, dipping only 2.79 percent, the report showed.
Wu said the arrival of Chinese firms helped sustain rental costs in the Dunbei district, where the vacancy rate stood at 5 percent.
Wu expects the downward trend to accelerate in the second half, when several foreign firms are set to relocate to Neihu (內湖) District, attracted by lower rental rates and the extension of the MRT service.
“The MRT Neihu Line will start operations on July 4, making offices in the area more competitive,” Wu said. “Rental costs in parts of Neihu have dropped to NT$900 per ping, which landlords in the Xinyi [信義] district cannot outbid.”
Despite poor economic fundamentals, commercial property values picked up modestly this quarter on expectations the market will benefit from Chinese capital.
Jeffrey Huang (黃增福), an associate manager at Evertrust Rehouse Co, said prices for office properties averaged NT$386,000 per ping in the second quarter, up 6 percent from the first quarter, although the figure represented a 10 percent contraction from a year earlier.
Office prices doubled in Hong Kong after Chinese capital began flowing to the city, he said, adding that he expected the local market to experience a similar boom as a result of closer financial ties with China.