Taiwan’s commercial property transactions have totaled NT$189.3 billion (US$6.03 billion) so far this year, rising 20.27 percent from NT$157.4 billion for the whole of last year, fueled by ample liquidity, low borrowing costs and limited supply, real estate consulting firm DTZ said yesterday.
“Demand for real estate properties remains strong as seen by -record-high prices for plots of land at auctions in the Greater Taipei area,” said Billy Yen (顏炳立), Taipei-based general manager of DTZ, a global real estate service provider.
The uptrend extended to auctions or leases for the development of public real estate properties after the government in March halted auctions of national properties in Taipei City to help curb soaring real estate prices.
On Tuesday, Radium Life Tech Co (日勝生) won a 50-year lease contract from the Taipei City Government for use of a 406 ping (1,340m2) plot of land plot for NT$1.19 billion. According to the lease, the land located on Fuxing S Road may be turned into a multi-function building with a total floor space of 3,880 ping — 13 floors above ground and three floors underground.
Also on Tuesday, Cathay Life Insurance Co (國泰人壽) bought a 936.57 ping plot in the Neihu (內湖) area for NT$1.36 billion to digest idle funds, the company said in a statement. The insurer plans to turn the property into an office building with a 3 percent annual return.
The outlook for commercial properties remains bright for the foreseeable future, unless the central bank takes drastic measures, such as denying loans for idle land, market watchers said recently.
Some have voiced concern that the monetary policymaker may ask land buyers to launch land development projects within a short period to curb property speculation.
“The measure would kill 50 percent of local developers,” Yen said yesterday. “I don’t think the central bank would adopt such a drastic measure.”
DTZ said it expected more construction and insurance firms to join the auctions for leases to the surface rights of three plots of land in the capital next month, despite the lack of permanent ownership for the land.
Charlie Yang (楊長達), chief valuation consultant at DTZ, said the plots of land may cost 15 percent less, compared with properties with permanent ownership, and 50 years is long enough for the winning bidder to return a profit.